Malacca Securities has put a RM0.66 fair value on SKA Capital Berhad, implying 53.5% upside from the IPO price of RM0.43. The research house’s report, Riding The Grid Capex Upcycle, projects a 24.8% three-year earnings CAGR for the power infrastructure engineering group.
Core PATMI is expected to reach between RM31.3m and RM42.3m over the next three years, according to Malacca Securities Research. The forecast rests on three pillars: Tenaga Nasional Berhad’s committed capex, data centre-linked grid demand, and a shift into higher-value works.
What SKA Capital Does
The group has about 17 years of track record and operates in three areas: substation engineering covering EPCC, civil and structural, and electrical and mechanical works; underground utilities engineering; and trading of electrical devices, equipment and construction materials. The research house sees its move beyond legacy civil works as the main driver of the earnings step-up.
In February 2025, SKA Rekabina acquired a 70% stake in Reltency Engineering for RM5.0m. Malacca Securities noted that this lets SKACAP perform civil and structural works in-house within its EPCC packages, rather than relying on subcontractors.
Key Growth Drivers in the Numbers
EPCC and electrical and mechanical works contributed a combined RM96.8m, or 40.1% of FY25 revenue. Reltency’s 13-year working relationship with TNB also brought the utility onto the customer list.
The underground utilities segment grew from nil in FY24 to RM9.5m in FY25, and reached RM25.7m, or 21.5% of revenue, in the five months to FPE26. The group plans to channel RM12.1m of IPO proceeds into machinery, including five horizontal directional drilling machines, so that drilling can be done in-house. Malacca Securities views this insourcing as a possible margin protection.
Data centre work backs the pipeline. SKACAP completed the Kempas Lama data centre landing station in Johor worth RM55.0m, its largest contract to date, and a 132kV main switching station for a Selangor data centre worth RM14.6m. Ongoing Elmina projects totalling RM81.1m cover underground works for a data centre and substation.
Order Book and Working Capital Capacity
As at 21 September 2026, the outstanding order book stood at RM313.4m, of which RM79.6m is expected to be recognised over the rest of FY26 and RM233.8m in FY27. That equals about 2.2x the average annual revenue of RM145.9m recorded across FY23 to FY25.
Malacca Securities also highlighted RM21.0m set aside as performance bonds for future projects. The research house believes this allows SKACAP to bid for higher-voltage work, including 500kV transmission substations, where the group has a track record dating back to 2014, and the ongoing Bukit Batu and Gurun East 500/275kV substations.
Valuation Basis Behind the RM0.66 Fair Value
Malacca Securities arrived at its fair value using a PE ratio of 16.5x on FY27f EPS of 3.99 sen. Applying that multiple to the forecast earnings gives roughly RM0.66, which the research house reports as a 53.5% premium to the IPO price.
The valuation is therefore only as reliable as the earnings forecast beneath it. A 24.8% CAGR assumes SKACAP converts its tender pipeline into revenue at the pace the research house expects.
Risks to the Thesis
The forecasts depend heavily on TNB’s RM18.0bn capex plan for 2026 translating into awarded contracts. Any delay in tender awards or project timing would affect the RM233.8m of revenue earmarked for FY27.
Concentration is another consideration. Much of the growth narrative is tied to one utility customer and to data centre investment in Johor and Selangor. Readers should consult the full report from M+ Online for the research house’s complete risk discussion.
What This Means for Retail Investors
The research house’s case is built on a clear order book and a defined capex programme, not on speculative contracts. Retail investors comparing the RM0.66 fair value with the RM0.43 IPO price should note that the gap depends on the 16.5x multiple and FY27 earnings holding up.
The full report, Riding The Grid Capex Upcycle, is available from M+ Online at mplusonline.com. It sets out the assumptions behind each figure cited here, so reading it directly is the best way to test the thesis.
Key Takeaways
- Malacca Securities assigns a fair value of RM0.66 to SKA Capital Berhad, a 53.5% premium to the IPO price of RM0.43.
- The research house projects core PATMI of RM31.3m to RM42.3m over three years, a 24.8% earnings CAGR.
- The order book of RM313.4m covers about 2.2 times average annual revenue over FY23 to FY25.
- Underground utilities grew from nil in FY24 to RM25.7m in the five months to FPE26.
- The forecasts hinge on TNB’s RM18.0bn capex plan for 2026 and on converting tenders into contracts.
Frequently Asked Questions
What is the fair value Malacca Securities has set for SKA Capital Berhad?
Malacca Securities has assigned SKA Capital Berhad a fair value of RM0.66 per share. That figure is 53.5% above the IPO price of RM0.43, according to the research house.
How does Malacca Securities arrive at the RM0.66 valuation?
The research house applies a PE ratio of 16.5x to FY27f EPS of 3.99 sen. The method ties the valuation directly to forecast earnings for the next financial year.
How much earnings growth does Malacca Securities project for SKA Capital?
Malacca Securities projects a three-year earnings CAGR of 24.8%, with core PATMI reaching between RM31.3m and RM42.3m. The research house links this growth to TNB’s capex plan and the group’s move into higher-value EPCC works.
How large is SKA Capital’s order book?
As at 21 September 2026, the order book stood at RM313.4m, with RM233.8m expected to be recognised in FY27. Malacca Securities notes this provides two years of revenue visibility.
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Source & Attribution
This article summarises a research report published by Malacca Securities Sdn Bhd (M+ Online) on 26 October 2026. All ratings, target prices and forecasts belong to Malacca Securities Research, not to the author of this blog.
Read the original report: M+ Online Research Report | View full PDF
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Ratings and target prices cited are those of Malacca Securities Research and are subject to change. Always do your own research before making investment decisions.
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