MITRA’s outstanding order book fell to c.RM400.0m from RM508.4m, against a RM1.2bn tender book, highlighting the need for stronger order replenishment to support future revenue visibility.
Property Development remained soft, with unsold inventory of RM532.7m and unrecognised sales of RM37.6m, with the Amber project in Bukit Sentos being a key contributor.
We lower our FY26F/FY27F/FY28F CNP forecasts by 57.5%/74.0%/67.0% respectively, to RM58.2m/RM46.9m/RM62.5m.
We maintain BUY with a lower TP of RM0.85 (from RM1.27), based on a revised sum-of-parts valuation, alongside a three-star ESG rating.
Order Book & Replenishment. The current order book stands at approximately RM400 million, alongside a tender book of RM1.2 billion. While the tender book size offers some optionality, the gap to our RM1.4bn average annual replenishment assumption remains wide, while the timing and conversion of these tenders remain uncertain. On data centre opportunities specifically, MITRA is tendering selectively, but management noted that competition remains elevated, including from overseas contractors. On costs, only minor wage inflation is expected for the remainder of FY26, which has already been factored into tender pricing and is not expected to affect the bottom line.
Property Development Segment. The revenue decline is a genuine take-up rate slowdown – specifically at the Amber project in Bukit Sentosa – rather than a timing issue around unit handovers. We view the slower take-up as a factor that could weigh on near-term property earnings visibility. Unsold inventory currently stands at RM532.74 million, against unrecognised sales of only RM37.60 million, suggesting the inventory overhang may take time to clear. On the pipeline, Puchong Prima's first plot (1,112 affordable serviced apartments, priced at RM250,000 per unit) is expected to launch in Q1 2027, with the project slated for completion within three years and to contribute meaningfully from FY27 through FY29. Separately, a new industrial project in Banting has been disclosed, though its launch remains subject to regulatory approval. Landbank stands at approximately RM250 million, with a selective approach indicated for further acquisitions, prioritising land with near-term development potential.
Arbitration Award & Cash Deployment. The remaining balance of the RM54.35m Final Arbitration Award is expected to be collected within 4-6 months, pending enforcement proceedings on the two outstanding contracts. Once collected, the cash is earmarked for working capital to support construction execution.
Durian Plantation. The division continues to incur development costs of approximately RM180,000 per month in development costs, with positive contribution still expected to remain one to two years away as trees reach fruit-bearing maturity.
Outlook. We now take a more measured view on MITRA’s medium-term outlook, with several developments affecting near-term earnings visibility. Despite the recent share price decline, management noted that the Group's financial performance remains healthy, underpinned by a sound balance sheet and a net cash position, with an NTA per share of approximately RM1.20 offering a solid underlying asset base. While acknowledging the lower construction order book as a key area of concern, management expressed confidence in its ability to replenish the order book, citing its track record in delivering major construction projects, technical capabilities and experienced execution team, and said it continues to pursue suitable projects while maintaining discipline in project selection and pricing. New property launches at strategic locations were also cited as a further avenue for earnings and cash flow contribution, reiterating that its focus remains on strengthening fundamentals, replenishing the order book and executing the property pipeline to create long-term shareholder value.
Earnings Revision. Following further clarification from management after our last below-expectation quarter result, we cut our order book replenishment assumption to RM800m/RM1.0bn/RM1.2bn for FY26F/FY27F/FY28F (from RM1.4bn per annum previously), reflecting management's lack of firm visibility on conversion timelines for the RM1.2bn tender book. We correspondingly lower our FY26F/FY27F/FY28F core net profit forecasts to RM58.2m/RM46.9m/RM62.5m, from RM137.0m/RM180.5m/RM189.2m previously.
Valuation. We maintain our BUY recommendation on MITRA with a lower TP of RM0.85 (from RM1.27), based on a revised sum-of-parts valuation, alongside a three-star ESG rating.
Risks. Margin compression from rising input and labour costs, cash flow volatility from working capital requirements, and execution and concentration risk from large projects.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.069854 | 4.102421 |
| EUR | 4.591087 | 4.595769 |
| CNY | 0.609308 | 0.609925 |
| HKD | 0.518824 | 0.522467 |
| SGD | 3.184274 | 3.206758 |