Southern Score Builders Berhad - Initiation
Mon, 30-Mar-2026 07:04 am
by Research Team • Apex Research

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SSB8 (0045)

Target Price (RM)

0.81

Recommendation

Buy

Investment Highlights

DC Growth Driver. The Group is positioning itself as a key beneficiary of Malaysia’s data centre boom through its Mechanical and Electrical (M&E) arm, SJEE Engineering, which focuses on higher-margin, shorter-cycle projects with turnaround periods of 12–18 months and net margins of approximately 15%. By targeting Tier 3 and Tier 4 data centres, which require advanced technical capabilities, SJEE is well placed to capitalise on rising hyperscaler investments. With an estimated build cost of RM25m per MW and M&E works accounting for c.RM4m per MW, a typical 50MW data centre represents an addressable M&E opportunity of approximately RM200m.

Robust Orderbook Visibility. The Group maintains an outstanding RM1.4bn orderbook with a healthy 3.0x book-to-bill ratio, providing clear earnings visibility through FY28. To maintain this momentum, the Group targets annual replenishment of approximately RM500m, driven by the high-growth data centre and residential sectors. This growth is supported by an asset-light model that enhances flexibility and capital efficiency, enabling the Group to achieve higher returns on equity while scaling efficiently with new contract wins.

Strategic Related-Party Synergies. A core pillar of the investment thesis is the Group’s strategic alignment with Platinum Victory and Radium Development Berhad, providing a consistent and predictable pipeline of turnkey projects. This deep-rooted relationship mitigates the replenishment outlook by offering priority access to high-value developments in prime Klang Valley locations without the uncertainty of competitive open tenders. With these partners targeting RM1bn in annual new launches, the Group maintains a relatively captive pipeline that provides some buffer against market volatility and ensures long-term earnings visibility through its efficient asset-light model.

Robust Earnings Outlook. The Group is projected to achieve strong core earnings growth of 87.2%, 37.6%, and 11.0% from FY26F to FY28F, supported by an RM1.4bn orderbook and a steady RM500m annual replenishment target. This acceleration is driven by the execution of high margin data centre projects with short 12 to 18-month cycles, complemented by a stable revenue foundation from residential projects that comprise 79.8% of the Group’s current unbilled order book. This strategic mix provides a balanced profile, combining medium-term visibility with potential margin upside from technical infrastructure projects.

Valuation & Recommendation. We initiate coverage on SSB8 with a BUY recommendation and a target price of RM0.81. Our valuation is derived from a target P/E multiple of 17.6x applied to our FY2027F EPS of 4.6 sen. This valuation represents one standard deviation above the Malaysian construction sector’s 3-year average P/E and a c.24% premium to peers’ average. We believe this is justified by SSB8’s: (i) healthy net cash balance sheet, (ii) asset-light business model and (iii) exposure to high-growth DC segment.

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Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.016085 4.043244
EUR 4.629771 4.633392
CNY 0.582367 0.582825
HKD 0.512520 0.516114
SGD 3.113561 3.134881