Analysis: Ibraco’s outlook hinges on construction pipeline replenishment

KUCHING (March 5): Ibraco Bhd’s (Ibraco) outlook will depend largely on its ability to secure new construction contracts as its current infrastructure projects are moving towards completion, says analysts at TA Securities Holdings Bhd (TA Research).

In a research note following the Ibraco’s recently concluded fourth quarter of financial year 2025 (4QFY25) briefing, TA Research said the company’s near-term earnings visibility remains supported by its existing construction orderbook, but attention is increasingly shifting towards replenishing the pipeline for future growth.

“Construction remains the group’s primary earnings pillar, supported by its current project pipeline. As at end-FY25, Ibraco’s construction orderbook stood at RM734.9 million, providing earnings visibility over the next two years,” they shared.

Some of Ibraco’s current key projects include the Kuching Autonomous Rapid Transit (ART) system and the Sarawak Second Trunk Road in Samarahan, which currently account for bulk of Ibraco’s current orderbook.

However, with these projects gradually progressing toward completion, TA Research said securing new contracts will be critical to sustaining earnings momentum.

“Ibraco’s management is targeting around RM1 billion worth of construction job wins in FY26, supported by an active tender book of approximately RM1 billion,” the research house said.

Possible upcoming wins include a sizeable government quarters project of which Ibraco has already received a letter of intent (LOI) at the end of FY25, and the Kuching ART Green Line which is estimated to be worth an approximate RM1 billion.

“Given its established track record in executing large-scale infrastructure projects, including the Mukah Airport Project and the Sarawak Water Supply Grid Programme, we believe Ibraco is well positioned to capture upcoming opportunities as Sarawak accelerates its development agenda toward achieving developed state status by 2030,” said the research arm.

Meanwhile the group’s property division is expected to moderate slightly in FY26 due to launch timing and slower booking conversions amid tighter banking financing approvals.

Ibraco is targeting property sales of RM300 million this year, down from the RM320 million achieved in FY25, which launched largely scheduled towards the second half of the year (2HFY26).

Growth is expected to be anchored by their flagship NorthBank township development which will see new phases such as the NorthBank Business Exchange commercial component that has about RM217 million worth of launches in FY26.

Near-term sales will also be supported by conversion of bookings at the group’s PrimeBay Industrial Park.

Despite the softer property outlook in FY26, TA Research guided that its earnings visibility remains underpinned by unbilled property sales of RM304 million at the end of FY25.

Additionally, Ibraco’s management has also indicated it is exploring potential new business opportunities. While no specific sectors were mentioned, TA Research notes that they had previously expressed interest in renewable energy-related opportunities, given their experience in industrial facilities such as methanol plant infrastructure.

TA Research maintains their FY26 to FY27 earnings forecasts for Ibraco, with forecasted net profit of RM55.9 million for FY26 and RM54.3 million for FY27.

They also maintain their sum-of-parts (SOP) derived target price of RM1.32 per share but upgrade their previous ‘hold’ call to ‘buy’ as recent share price weakness has lifted Ibraco’s total upside potential to above 12 per cent.