HSS Engineers Bhd - HEB Secures RM10.95m IWK Contract
Tue, 29-Sep-2026 07:05 am
by Research Team • Apex Research

Counter

HSSEB (0185)

Target Price (RM)

0.70

Recommendation

Buy

·   HEB, through its associate HSSI, secured a RM10.95m contract from Sutracom Sdn Bhd, the main contractor for Package UP-3: Proposed Design and Build for Upgrading Works of Indah Water Konsortium Sdn Bhd’s (“IWK”) Sewage Treatment Plants in Negeri Sembilan and Melaka (Phase 2), to provide C&S and M&E engineering consultancy and construction site supervision services.  

·   With this award, the Group’s YTD contract wins have risen to c.RM200.0m, lifting its outstanding order book to a sizeable RM2.18bn, representing a book-to-bill ratio of 9.9x of FY25 revenue.

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

·   We maintain our BUY on HEB with an unchanged TP of RM0.70, based on a SOP valuation.

 

Secures RM10.95m IWK Sewage Treatment Plant Upgrading Contract. HEB has accepted a Letter of Appointment from Sutracom Sdn Bhd, the main contractor for Package UP-3: Proposed Design and Build for Upgrading Works of IWK Sewage Treatment Plants located in Negeri Sembilan and Melaka (Phase 2). HEB’s scope comprises Civil & Structural and Mechanical & Electrical engineering consultancy services for the project, together with full-time construction site supervision during the construction period. The estimated services value is RM10.95m, commencing 28 September 2026 with an estimated completion within 42 months.

 

Our View. We view this contract win positively as it adds to HEB’s orderbook and reinforces its presence in the domestic water and wastewater segment. While the RM10.95m contract is relatively small at Group level, the 42-month duration provides additional earnings visibility. Assuming a 35% GP margin, we estimate the contract could contribute approximately RM3.83m in gross profit over its tenure. Given the Group's established track record in executing similar consultancy service projects, we believe execution risk on this award is manageable.

 

Outlook. This award adds to a string of recent water and wastewater-sector wins for the HEB Group, reinforcing its positioning as one of Malaysia’s leading engineering consultancies in this space. With this award, the Group’s total order book stands at c.RM2.18bn, equivalent to a robust c.9.9x coverage of FY25 revenue, alongside a tender book of c.RM500m. We continue to expect Malaysia's accelerating infrastructure cycle, underpinned by Budget 2026's RM81bn development allocation and a broader c.RM131.3bn pipeline spanning transportation, water, rail and renewable energy, to support continued order book replenishment into FY26-FY28, alongside the Group's ongoing diversification into higher-value recurring income streams such as solar, digital/AI and international contracts. We also see the upcoming Budget 2027, slated for tabling on 9 October 2026, as a potential catalyst, with further infrastructure and development allocations likely to sustain HEB's order book momentum going into FY27.

 

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

 

Valuation. We maintain our BUY recommendation on HEB with an unchanged TP of RM0.70, based on a SOP valuation, supported by a three-star ESG rating.

 

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

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