HSS Engineers Berhad - HEB Bags RM34.0m NPWSS Design Consultancy Contract
Wed, 29-Jul-2026 07:20 am
by Research Team • Apex Research

Counter

HSSEB (0185)

Target Price (RM)

0.47

Recommendation

Hold

  • HEB secured a RM34.0m contract for the Lead Design Consultancy (LDC) and Detailed Design Consultancy 4 (DDC4) service package for the Northern Perak Water Supply Scheme and Sale of Excess Treated Water to Penang (NPWS). 

  • With this award, the Group’s YTD contract wins have risen to RM163.0m, lifting its outstanding order book to a sizeable RM2.28bn, representing a book-to-bill ratio of 9.5x. 

  • The Group maintains a tender book of RM500m, supporting near-term earnings visibility.

  • We downgrade our recommendation from BUY to HOLD on HEB with a slightly lower TP of RM0.47, based on a lower SOP valuation.

 

Secures RM34.0m Consultancy Service Package Contract. HEB secured a contract from Gamuda Engineering Sdn Bhd for the Lead Design Consultancy and Detailed Design Consultancy 4 services package for the NPWSS project. The total contract sum is RM34.0m, with works commencing in June 2026 and an estimated completion within 66 months. The scope of service comprises lead design consultancy for NPWSS and detailed design consultancy for the water treatment plant in NPWSS which includes preliminary, pre-final and final design, tender stage support and support during the construction and defects liability period for the Project.

 

Our View. We view this contract win positively as a validation of the Group’s design capabilities in the domestic water infrastructure segment, coming just over three months after HEB’s own RM30.5m Jeniang Water Transfer Scheme win in March 2026. Assuming a GP margin of 33%, the NPWSS contract is expected to generate approximately RM11.2m in gross profit over its 66-month duration. Given the Group’s proven track record in executing water-related projects, we believe execution risk remains manageable.

 

Outlook. This award adds to a string of recent water-sector wins for the HEB Group, reinforcing the Group’s positioning as one of Malaysia’s leading engineering consultancies in the water resources space. With this award, HEB Group’s YTD new contract wins have risen to RM163m, lifting the outstanding order book to RM2.28bn, equivalent to a robust book-to-bill ratio of 9.5x based on our FY26F revenue forecast. The Group also maintains a tender book of RM500m, which should support continued order book replenishment into 2H26. We continue to expect domestic water treatment, flood mitigation and data centre-related opportunities to underpin new contract flow into FY26-FY27.

 

Earnings Revision. No change to earnings forecasts as this award falls within our order book replenishment assumption for FY26 of RM250m.

 

Valuation. We make a slight revision to our DCF-based valuation of HEB's Solar Asset segment, resulting in a marginally lower SOP-derived TP of RM0.47 (from RM0.48). Despite the modest reduction in our TP, the key reason for our recommendation downgrade is HEB's recent share price rally to RM0.51, which has exceeded both our previous TP of RM0.48 and our revised TP of RM0.47, suggesting that its current fundamentals are largely priced in. We therefore downgrade the stock from BUY to HOLD.

 

Risk. Delays in project execution & delivery, foreign project exposure leading to geopolitical risks and lower-than-expected order book replenishment.

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