KUALA LUMPUR: Jati Tinggi Group Bhd will gain from Tenaga Nasional Bhd's (TNB) plans to invest RM90 billion in Malaysia's grid over the next five years, according to Rakuten Trade.
According to the research firm, Jati Tinggi's top three major customers are mainly the main contractors appointed by TNB.
"With more than 19 years of working relationships with its top three customers, there are collaboration agreements signed that provide Jati Tinggi with the first right of refusal to accept projects offered by these customers.
"This simply illustrates that Jati Tinggi will be a prime beneficiary of the National Energy Transition Roadmap even before we factor in its expansion into East Malaysia, having inked a Memorandum of Understanding (MoU) with a Sarawakian company involved in civil and structural consultancy works," it said in a note.
Jati Tinggi is anticipated to report earnings of RM5.6 million and RM10.8 million, respectively, for the fiscal years 2023 (FY23) and 2024 (FY24).
According to Rakuten Trade, as of Oct 31, 2023, the company's orderbook was valued at RM233.25 million.
The management anticipates gradually realising the unbilled order book over the course of the following one to three fiscal years, it said.
"Going forward, we foresee more rapid (due to lesser variation orders and extensions of time) and profitable progress completion for its ongoing projects," it said in a note.
The research firm added that the company is also gradually evolving from being a subcontractor into a main contractor, which allows Jati Tinggi to tender for larger projects and improve its profitability.
Jati Tinggi's debut on the ACE Market of Bursa Malaysia is expected to improve its net gearing to 0.5 times from 0.76 times.