ISF sees bright prospects amid pipeline growth

By the Editorial Team · Tuesday, September 22, 2026

ISF Group Bhd is set to boost its revenue and earnings through a growing portfolio of data centre infrastructure projects, which currently comprise a significant portion of its order book and tender pipeline. This expansion, supported by high-margin contracts and a stable margin profile, has led Apex Securities Research to upgrade ISF’s target share price and reaffirm a "buy" rating, anticipating strong earnings growth through FY28.

ISF Group Bhd is poised to benefit significantly from Malaysia’s growing data centre infrastructure sector, with related projects expected to drive its revenue and earnings growth in the coming years.

Currently, data centre (DC) projects make up around 25% of ISF’s RM150 million order book, while approximately 60% of its RM500 million tender pipeline is tied to DC-related contracts. So far this year, the company has secured RM47 million in new contracts, including four residential sub-contracts and two data centre awards. Notably, one of the DC contracts involves a RM14.5 million hyperscale DC sewerage package.

Margins for ISF have remained stable at approximately 28%, supported by a rising contribution from high-margin DC projects. Apex Securities Research highlighted that gross margins on DC projects are near 50%, considerably higher than the company’s overall margins.

The brokerage firm projects that earnings growth in financial year 2027 (FY27) will be fueled by increased contract wins in the data centre segment. Looking further ahead, FY28 is expected to see benefits from large-scale water and sewer infrastructure projects, including initiatives targeting non-revenue water reduction.

By applying a 35% conversion rate to the DC-related tender book alone, Apex Securities Research estimates that ISF could secure about RM105 million in additional contracts during the latter half of this year. Such awards would substantially increase the share of DC projects in ISF’s order book, potentially enhancing earnings visibility for FY27 and FY28.

Revenue forecasts for ISF anticipate an increase from RM122.6 million in FY26 to RM149.7 million in FY27, reaching RM168.2 million in FY28. Similarly, core net profit is expected to rise from RM34.9 million in FY26 to RM42.5 million in FY27 and RM48.8 million in FY28.

Reflecting these positive fundamentals, Apex Securities Research has reaffirmed its “buy” rating on ISF and raised its target share price to RM1.03 from RM0.92. The upgraded valuation is based on a higher price-to-earnings multiple of 24.2 times, applied to an unchanged FY27 earnings per share estimate of 4.3 sen. The brokerage cited ISF’s consistent earnings performance, a strong net cash position, and its unique position as the sole publicly listed pure-play company in Malaysia’s DC piping and sewerage sector as reasons for the re-rating.

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