HSS Engineers: ‘Buy’ Call With Strong Growth from Mega Infrastructure Projects

KUALA LUMPUR, 16 Aug 2025 – Apex Research has initiated coverage on HSS Engineers Berhad (HEB) with a ‘Buy’ recommendation and a target price of RM0.75, citing the group’s unrivalled technical expertise, robust order book, and strong earnings growth outlook.

For FY24, HEB recorded a record-high revenue of RM201.2 million and a core net profit of RM24.7 million, representing year-on-year growth of 7.4% and 22.0% respectively. The performance was driven by contributions from high-impact infrastructure projects in Malaysia and abroad.

The group’s order book stood at RM2.1 billion as at end-FY24, equivalent to 10.3 times its FY24 revenue and providing earnings visibility for the next eight years. Apex Research projects a three-year core net profit CAGR of 45.3% to RM52.2 million in FY26, underpinned by robust contract replenishment, progress on the Baghdad Metro project, and anticipated gains from the MRT3 Circle Line.

HSS Engineers

HEB’s largest-ever overseas contract — the Baghdad Metro — is advancing into more active execution, improving both revenue recognition and cash flow visibility. Domestically, the group is poised to benefit from infrastructure allocations under the 13th Malaysia Plan, particularly in connectivity, flood mitigation, and green energy.

Valuation-wise, Apex Research applied a 7.2x P/E multiple to FY26 forecast earnings per share of 10.3 sen, supported by a three-star ESG rating. The firm notes that HEB is currently trading near two standard deviations below its five-year average, with potential for further rerating once progress on its overseas projects becomes clearer.

However, the research house flagged potential risks including project delays, geopolitical exposure in foreign markets, and weaker-than-expected order book replenishment.

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