SSB8 reported a 3QFY26 Core Net Profit (CNP) of RM19.7m (+97.0% YoY; +90.3% QoQ), bringing 9MFY26 CNP to RM45.1m (+57.9% YTD). We deem the results to be below expectations, as it only accounts for 62.7% of our and 64.6% of consensus forecasts.
We expect the Group to deliver resilient earnings growth amid prevailing macroeconomic uncertainties, supported by its sizeable outstanding order book of RM1.6bn. This translates to a healthy book-to-bill ratio of 3.5x based on FY26F revenue.
We have moderated our margins assumptions to reflect ongoing cost pressures stemming from higher raw material and logistics costs. Consequently, our FY26F/FY27F/FY28F CNP forecasts are revised downwards by -4.7%/-4.1%/-4.5%, respectively.
We maintain our BUY recommendation on SSB8 with lower TP of RM0.78 (from RM0.81), based on unchanged 17.6x P/E multiple applied to lower FY27F EPS of 4.4 sen (from 4.6 sen).
Results Below Expectations. SSB8reported a 3QFY26 Core Net Profit (CNP) of RM19.7m (+97.0% YoY; +90.3% QoQ), bringing 9MFY26 CNP to RM45.1m (+57.9% YTD). This accounted for 62.7% of our full-year estimate and 64.6% of consensus forecast. Although we expect the Group to deliver a stronger sequential performance in the final quarter, we deem the result to be below expectations. The shortfall was primarily attributable to slightly weaker-than-expected CNP margin across the Group’s operations.
YTD. Revenue surged +124.2% to RM314.0m, while CNP grew at a comparatively slower pace of +57.9%, resulting in a -603bps contraction in CNP margin to 14.4%. The strong revenue growth was largely driven by SJEE, whose contributing rose to RM129.1m (+469.2%), supported by accelerated project progress following recent contract awards.
QoQ. CNP increased +90.3%, supported by a 400bps expansion in CNP margin to 14.8%. The improvement was driven by a higher contribution from the higher margin M&E segment, which accounted for 44.3% of total quarterly revenue compared to 30.1% in 2QFY26. Performance was further supported by a +61.2% increase in revenue from the turnkey construction services segment to RM59.4m, driven by ongoing piling and main building work for PV 22 Residences.
Outlook. We expect the Group to deliver resilient earnings growth amid prevailing macroeconomic uncertainties, supported by its sizeable outstanding order book of RM1.6bn. This translates to a healthy book-to-bill ratio of 3.5x based on FY26F revenue, providing strong earnings visibility through FY28. We remain positive on the Group’s order book replenishment prospects, underpinned by expanding opportunities in the data centre segment, alongside recurring project flows from its related parties. The Group’s YTD contract wins, derived entirely from the M&E segment, stands at RM456.1m, placing the Group in a strong position to achieve our yearly replenishment assumption of RM500m. To safeguard profitability against recent volatility in raw material costs, the Group employs a proactive back-to-back procurement strategy, locking in material prices immediately upon contract award to protect margins. Nevertheless, prolonged macroeconomic uncertainty and sustained cost pressures could weigh on execution efficiency and margin sustainability going forward.
Earnings Revision. Following the results, we have moderated our margins assumptions to reflect ongoing cost pressures stemming from higher raw material and logistics costs. Consequently, our FY26F/FY27F/FY28F CNP forecasts are revised downwards by -4.7%/-4.1%/-4.5%, respectively.
Valuation & Recommendation. We maintain our BUY recommendation on SSB8 with a lower TP of RM0.78 (from RM0.81), based on unchanged 17.6x P/E multiple applied to a lower FY27F EPS of 4.4 sen (from 4.6 sen), alongside a three-star ESG rating.
Risks. Rising material costs, labour shortages and oversupply of high-rise residential projects in the Klang Valley area.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.955678 | 3.983535 |
| EUR | 4.617050 | 4.621850 |
| CNY | 0.585177 | 0.585795 |
| HKD | 0.504786 | 0.508370 |
| SGD | 3.095618 | 3.117454 |