PETALING JAYA: Critical Holdings Bhd
’s move up the semiconductor engineering supply chain through higher-value engineering, procurement, construction and commissioning (EPCC) projects is expected to support stronger earnings growth and open doors to larger contract opportunities, according to analysts.
Following its latest RM65mil contract win, analysts are upbeat about the group’s ability to secure increasingly higher-value projects and strengthen its growth prospects.
“We believe Critical is entering a structurally higher earnings and growth trajectory,” MBSB Research said.
It noted that the group’s sizeable projects should underpin earnings over the next two years, while successful execution could strengthen its credentials for similar large-scale opportunities.
Critical secured its third engineering, procurement, construction or EPC contract this year after its wholly-owned subsidiary, Critical Sales and Services Sdn Bhd, bagged a RM65mil contract from a multinational company.
The scope includes mechanical, electrical and process utilities, as well as a cleanroom architecture system. The project is expected to be completed by March 31, 2027.
“We believe this job could be part of a larger semiconductor facility expansion, potentially creating opportunities for follow-on contracts as the customer progressively expands its production capacity,” Phillip Capital Research said.
Following the latest award, Critical’s year-to-date contract wins are estimated at RM250mil, bringing its outstanding order book to RM1.2bil.
Meanwhile, MBSB Research estimated Critical’s outstanding order book at RM1.13bil, comprising mainly plantroom (69.4%) and cleanroom (20.5%) projects, with data centre and maintenance jobs accounting for 3.1% and 7%, respectively.
A substantial portion comprises the RM772.5mil EPC contract for an industrial facility and supporting infrastructure at Kulim Hi-Tech Park, secured on June 15, 2026.
MBSB Research expects this customer concentration risk to gradually moderate as Critical builds its EPCC track record, broadens its customer base and secures more sizable projects from other clients.
The research house noted that Critical continues to actively tender for new jobs, with its tender book standing at RM1bil, of which about 90% are semiconductor-related and the remaining 10% are DC projects.
However, it does not expect the RM1.17bil in new projects secured in FY26 to be immediately repeated, given the group’s focus on executing its two sizable EPC projects, including the RM772.5mil award, while manpower remains a key capacity constraint.
Both research houses maintained their “buy” recommendations and target prices on the stock. Phillip Capital retained its 12-month target price of RM3.80, pegged to 22 times FY28 forecast earnings per share, while leaving its earnings forecasts unchanged.
MBSB Research expects Critical to announce its first quarter of FY27 results for the period ended Sept 30, 2026 on Nov 21. It expects FY27 earnings to roughly triple from RM21.4mil in FY26.
