ISF Group Bhd - Within Expectations
Thu, 26-Feb-2026 09:13 am
by Tan Wai Wern • Apex Research

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ISF (0390)

Target Price (RM)

0.55

Recommendation

Buy

  • ISF posted a 4QFY25 core net profit (CNP) of RM6.8m (+35.8% QoQ), bringing 12MFY25 CNP to RM25.3m (+163.0% YoY). The results made up 100.8% of our full-year forecast, and we deem them to be within expectations.

  • We expect the Group’s earnings to remain resilient going into FY26, supported by an outstanding order book of c.RM120.7m. This represents a healthy book-to-bill ratio of 1.0x, providing near-term earnings visibility.

  • 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.

 

Within Expectations. ISF posted a 4QFY25 core net profit (CNP) of RM6.8m (+35.8% QoQ), bringing 12MFY25 CNP to RM25.3m (+163.0% YoY). The results made up 100.8% of our full-year forecast, which we deem to be within our expectation.

 

YoY. Quarterly comparison is not available as there is no interim financial report prepared for the comparative period for the preceding year as the Group was listed on the ACE Market on 28 January 2026. On a full-year basis, CNP surged 163.0%, fuelled by robust expansion within the data centre segment. Net margins expanded 809bps over the period, a significant uplift driven primarily by a higher composition of high-yield projects throughout the year.

 

QoQ. CNP grew 35.8%, driven by accelerated progress billings as major data centre project approached its high-margin completion phase. Consequently, gross margins expanded by 946bps, reflecting the execution of large-scale data centre contracts with superior profitability.

 

Outlook. We anticipate ISF’s earnings to remain highly resilient heading into FY26F, underpinned by a substantial outstanding order book of RM120.7m. This translates to a healthy book-to-bill ratio of 1.0x, providing the Group with clear near-term earnings visibility. The Group's growth outlook is further reinforced by a robust tender pipeline at an estimated RM400m. Given ISF's proven track record and specialized technical capabilities, we project a conservative win rate of 30%, which should comfortably support the Group’s order book replenishment targets. Strategically, ISF is in prime position to capture opportunities from the ongoing momentum in Malaysia’s data centre landscape. As hyperscalers continue to expand their footprint in the Klang Valley and Johor, we expect the Group to secure an increasing share of fast-turnaround, high-margin data centre contracts. Unlike generic residential projects, these specialized jobs benefit from shorter execution cycles and structurally superior economics, which we believe will act as a primary catalyst for both revenue expansion and margin appreciation in the coming years.

 

Earnings Revision. No change to earnings forecasts.

 

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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