Company Update: 12 June 2026
Commercial projects represent 89.6% of the order book; 1H26 gross margin expanded 2.8ppt to 15.0% alongside 58.2% YoY revenue growth. Data-centre projects (~23% of backlog) carry higher complexity and typically command better margins, adding a margin-accretive dimension to the commercial mix. We expect continued mix improvement to sustain gross margins within management’s 12-15% medium-term target, with upside should data-centre contribution grow.
Carrying value of ~S$13.1mn compares with a bank valuation of ~S$19.0mn (per management). Subject to the receipt of TOP and relevant authority approvals, ~100 dormitory beds are expected to be available for rental at S$450 per bed per month, implying potential annual rental income of approximately S$540k.
1H26 net profit of S$3.9mn has already exceeded full-year FY25’s S$2.6mn. Fixed-cost absorption should drive further operating leverage as revenue scales toward management’s S$100mn target. Management has committed to a minimum 40% payout for FY26, twice its formal 20% policy floor, with capex moderating after FY26 to support sustained shareholder returns.
Key downside risks include (i) project execution and revenue recognition delays; (ii) working-capital and cash conversion risk; (iii) fixed-price contract exposure to cost inflation; (iv) subcontractor and foreign-worker availability risk; (v) data-centre execution risk; and (vi) order book replenishment risk.
