ISF Group Bhd - First Announced Award for FY26
Mon, 16-Feb-2026 12:23 pm
by Tan Wai Wern • Apex Research

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ISF (0390)

Target Price (RM)

0.55

Recommendation

Buy

 

  • ISF has secured a sub-contracting works worth RM10m for cold-water plumbing services & sanitary plumbing system jobs for a serviced apartment.

  • Assuming a GP margin of 25%, the contract is expected to contribute c.RM2.5m (or 4.8% of FY26F GP) over FY26F-FY29F.

  • Maintain BUY recommendation with an unchanged TP of RM0.55, based on 18.7x P/E multiple applied to its FY26F EPS of 2.9 sen, along with a three-star ESG rating.

 

Secures Sub-Contracting Contract Worth RM10m. On 13 Feb 2026, ISF clinched a RM10m sub-contract works contract from Kerjaya Prospek (M) Sdn Bhd, a wholly-owned subsidiary of Kerjaya Prospek Group Berhad. The project involves Cold-Water Plumbing Services & Sanitary Plumbing System Works for a serviced apartment. Works has commenced on the same date and is scheduled for completion on 15 Mar 2029.

 

Our View. We view this contract favourably as it represents ISF’s first job win for FY26, which bolsters the group’s earnings visibility through FY29. Based on an estimated 25% GP margin, the project is projected to yield RM2.5m in GP over its 37-month duration (representing 4.8% of our FY26F GP). We believe execution risks remain minimal, backed by ISF’s robust track record in residential property projects.

 

Outlook. Despite prevailing macroeconomic headwinds, we anticipate a resilient performance from ISF, anchored by a substantial outstanding order book of RM120.7m. This represents a healthy book-to-bill ratio of 1.2x, providing the Group with high earnings visibility. Based on an estimated burn rate of RM18.7m between Dec 2025 and Feb 2026, we calculate that the Group successfully secured an equivalent RM18.7m in new contract wins during this two-month window. The Group’s project mix has also seen a strategic shift. As of Feb 2026, the order book comprised of 58.0% residential properties (up from 56.9% in December), 21.0% data centres (up from 13.9% in December), and the remaining 21.0% spanning industrial and commercial developments. With an active tender book exceeding RM400m and an estimated win rate of 30%, we remain optimistic regarding the Group's order replenishment pipeline and its ability to sustain growth momentum through FY26F.

 

Figure 1 & 2: Orderbook Movement between Dec 25 to Feb 26 & Orderbook Breakdown by Segment

*Comprises of industrial properties, commercial properties and others

Source: Company, Apex Securities

 

Earnings Revision. No change to earnings revision as this award falls within our orderbook replenishment assumption for FY26 of RM150m.

 

Valuation & Recommendation. We maintain our BUY recommendation on ISF with an unchanged TP of RM0.55, based on 18.7x FY26F EPS of 2.9 sen, along with a three-star ESG rating.

 

Risks. Project execution & operational risk, regulatory & compliance risk and industry cyclicality risk.

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