• ISF’s 1HFY26 core net profit of RM16.0m, representing 46% of our FY26F forecast and 50% of consensus estimates, which is in line with our expectation.
• Outlook remains positive, supported by the Group’s outstanding order book of RM150m, translating to a robust revenue coverage of 1.2x FY26F revenue.
• We maintain our FY26F/FY27F/FY28F core net profit forecasts of RM34.9m/RM42.5m/RM48.8m.
• Maintain BUY recommendation with an unchanged TP of RM0.92, based on 21.5x P/E applied to FY27F EPS of 4.3 sen, alongside a three-star ESG rating.
Results Inline. ISF reported a 2QFY26 core net profit of RM8.8m (+20.7% QoQ), after adjusting for impairments (RM0.6m). This brought 1HFY26 core net profit to RM16.0m, representing 46% of our FY26F forecast and 50% of consensus estimates, broadly in line with both our and consensus full-year forecasts, supported by resilient earnings contributions from ongoing high-margin data centre projects.
QoQ. Revenue rose 19.9% QoQ to RM31.4m (1Q26: RM26.2m), mainly driven by higher contributions from ongoing projects, including a semiconductor factory in Penang, as the projects progressed towards completion. Core net profit grew 20.7% QoQ to RM8.8m, broadly tracking the revenue growth and profit margins held steady.
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. Outlook. We believe Malaysia's DC contract cycle is set to enter a new phase from 2H26F, shifting from core-and-shell construction to downstream M&E/MEP/piping fit-out scopes, with work that typically follows project mobilisation by 6-12 months. Contract award trends since early 2026 suggest several major hyperscale and co-location DCs mobilised in late-2025 are now beginning to enter this fit-out stage. While ISF has historically been slow to capture this flow, but its 2026 year-to-date momentum stands out: the Group has secured RM47.0m in new contract wins YTD, comprising four residential sub-contracts and two DC-related wins, including the RM14.5m hyperscale DC sewerage package. These wins point to the possible start of a more robust order replenishment cycle in 2H26F. We believe ISF's pre-IPO track record and tender credibility built on past work for blue-chip DC clients, should continue to support its position as this next wave of contract awards materialises.
ISF's earnings outlook remains resilient, anchored by an order book of c.RM150m, of which DC scopes now make up c.25%. This provides a book-to-bill ratio of c.1.2x FY26F revenue and underpins solid earnings visibility into FY27F. More significantly, ISF's tender book has expanded to an all-time high of c.RM500m, of which 60% (c.RM300m) is DC-related. Assuming a 35% success rate on the DC tender value alone, we estimate potential DC-related contract wins of c.RM105m in 2H26F — a level that would meaningfully lift the DC share of the order book and support the flow-through of higher-margin scopes into FY27F earnings.
Earnings Revision. We maintain our FY26F/FY27F/FY28F core net profit forecasts of RM34.9m/RM42.5m/RM48.8m respectively, with no changes to our earnings assumptions.
Valuation & Recommendation. We maintain our BUY recommendation on ISF with an unchanged TP of RM0.92, based on 21.5x PE applied to FY27F EPS of 4.3 sen, along with a three-star ESG rating. We continue to 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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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.032092 | 4.058429 |
| EUR | 4.727705 | 4.730319 |
| CNY | 0.601817 | 0.602165 |
| HKD | 0.514265 | 0.517647 |
| SGD | 3.175026 | 3.196037 |