ISF Group Bhd - Within Expectations
Thu, 21-May-2026 08:43 am
by Tan Wai Wern • Apex Research

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ISF (0390)

Target Price (RM)

0.62

Recommendation

Buy

  • ISF posted a 1QFY26 CNP of RM7.3m (+6.5% QoQ), representing 27.0% of our full-year forecast. We deem the results to be within expectations.

  • Outlook remains positive, supported by the Group’s outstanding order book of RM148.1m, translating to a robust revenue coverage of 1.2x FY26F revenue.

  • Maintain BUY recommendation with an unchanged TP of RM0.62, based on 18.7x P/E applied to FY27F EPS of 3.3 sen, alongside a three-star ESG rating.

     

Within Expectations. Excluding impairments and one-off listing expenses totalling RM2.9m, ISF posted a core net profit (CNP) of RM7.3m (+6.5% QoQ). We deem the results to be within our expectations as it made up 27.0% of our full-year forecast.

 

YoY. Comparatives figures were not available as no interim financial report was prepared for the corresponding period in the preceding year due to the Group being listed on 28 January 2026.

 

QoQ. CNP grew +6.5%, driven by the completion of a data centre project in Johor. Consequently, CNP margin held constant at an industry-leading 27.7%.

 

Outlook. Looking ahead, we expect ISF’s earnings outlook to remain resilient, supported by its healthy outstanding order book of RM148.1m, which translates into a solid revenue cover of 1.2x FY26F revenue and provides strong medium-term earnings visibility. Based on an estimated burn rate of RM10.2m per month, we estimate that the Group has secured RM58.0m in new contract wins YTD. Coupled with an estimated outstanding tender book of RM350m and a disciplined bidding strategy anchored on a projected 30% win rate, we believe ISF remains on track to achieve our FY26 order book replenishment target of RM150m.

 

Growth prospects are expected to remain underpinned by sustained investments in industrial facilities, logistics hubs and data centres, supported by national digital infrastructure initiatives and the establishment of the National AI Office. In particular, the Group’s proven track record in delivering piping installation services for high-specification data centre environments positions it well to capitalise on rising demand from this fast-growing segment, where projects typically offer shorter execution cycles and structurally higher margins. Regionally, the Johor–Singapore Special Economic Zone (JS-SEZ) is expected to catalyse further residential and industrial development activities within the southern region, supporting long-term demand for piping and utility infrastructure works. Together with the Group’s established presence in Johor, particularly in maintenance and repair services, we believe ISF is strategically positioned to capture recurring service opportunities and sustain earnings growth over the medium term.

 

Earnings Revision. No changes to our earnings forecast.

 

Valuation & Recommendation. We maintain our BUY recommendation on ISF with an unchanged TP of RM0.62, based on 18.7x PE applied to FY27F EPS of 3.3 sen, along with a three-star ESG rating. We like ISF for its: (i) industry-leading margins, (ii) steady earnings growth trajectory and (iii) favourable exposure to high-growth data centre segment.

 

Risks. Rising material costs, labour shortages and slower-than-expected contract replenishment.

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Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

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