• Impact Capital Holdings Berhad is a Sarawak-based ICT systems integrator with a 21-year operating history, designing, integrating and maintaining ICT equipment and systems for critical infrastructure — telecommunications networks, enterprise networks, data centres and security systems — primarily for state government bodies and utility providers. ICT integration contributed 72.7% of FY26 revenue, while Sarawak accounted for 75.1%.
• We project core PATMI to expand at a 17.3% CAGR to reach RM10.7m, RM12.3m and RM15.1m in FY27–FY29, respectively. This growth is underpinned by (i) order book replenishment of RM200–250m a year, (ii) the continued build-up of higher-margin recurring maintenance and software income, and (iii) margin expansion as the mix shifts towards services and in-house delivery. The RM169.9m order book, including RM133.7m scheduled for recognition by June 2027, provides visibility over FY27.
• We assign a fair value of RM0.36 per share for IMPACT, indicating a 63.6% upside from the IPO price of RM0.22. Our valuation is derived by ascribing a target P/E multiple of 15.2x to mid-FY28 core EPS of 2.39 sen, in line with the peer average forward P/E of 15.2x.

Investment highlights

Sarawak’s leading critical-infrastructure integrator. Impact Capital is the largest telecommunications equipment integrator among the industry players benchmarked by Vital Factor, with FY26 revenue of RM154.7m, ahead of listed peers Binasat (RM118.2m), Hextar Capital (RM84.8m) and Divfex (RM82.0m). Its standing rests on delivery at scale. Since 2021, it has secured four government-initiated projects worth more than RM50m each, including SMART 600, its largest contract to date, under which 426 rural tower sites have been installed and accepted, and POP 2, a fibre broadband rollout across c.681 rural sites. It is also a long-standing integrator for SEB Group, Sarawak’s power utility, having upgraded its power-grid optical transmission network since 2020 with multiple orders for additional sites each year. These credentials are backed by a CIDB G7 registration with no tender limit, a UPKJ Category A registration to bid for Sarawak government contracts, Huawei Diamond status since 2021 and 15 other technology partnerships. With 21 years of track record in networks where reliability matters more than price, we see Impact Capital as the partner of choice for the next phase of Sarawak’s digital infrastructure.

A multi-year runway, with FY27 already covered. Sarawak’s digital build-out is far from finished. By the Sarawak government’s own count, the state had 4,217 operational towers in November 2023 against around 7,000 needed by 2030 for full coverage of populated areas, 5G reaches 63.8% of its populated areas versus 82.4% nationally, and only 34.0% of its households have fixed broadband against 48.0% nationwide. Funding is in place to close these gaps: Sarawak’s 2026 budget allocates RM450m to the SMART projects and MySRBN, Budget 2027 sets aside RM5bn for JENDELA, and Budget 2026 allocated RM770m to the PoP Phase 2 rollout, with 1,362 of its 3,693 planned sites nationwide still outstanding at end-2025. Near-term earnings are well covered. The RM169.9m order book as at 30 September 2026, or 1.1x FY26 revenue, includes RM133.7m scheduled for October 2026 to June 2027, leaving only c.RM21m to be filled to match FY26 revenue. New wins continue to come through, including a RM6.2m OTN contract for several substations, network projects for educational institutions and the railway sector, and the KL International Airport maintenance contract, all secured in 2026.

Recurring income is compounding. Integration contracts typically bundle three to five years of software subscriptions, often with matching maintenance and support, and this annuity is now building. Recurring revenue rose 73.4% to RM33.1m in FY26, lifting its share of group revenue to 21.4% from 13.1% a year earlier, as maintenance renewals added RM7.2m and software subscriptions RM6.3m. The services order book grew 37.9% to RM36.9m in the ten months to September 2026 and stretches to 2030 and beyond. With hundreds of SMART 600 and POP 2 sites moving into their support phase, and the KL International Airport contract showing the Group can sell maintenance on a standalone basis, we expect recurring income to keep rising as a share of earnings, smoothing the lumpiness of project revenue.

Margins are widening as the mix shifts. Gross margin has risen from 9.3% in FY23 to 14.2% in FY26, and the drivers are structural. Integration margin improved to 12.3% from 7.8% in FY23, with the latest step-up from 10.8% in FY25 driven by higher-margin data centre work, including a private cloud project for a power utility. Services, the highest-margin segment at 25.9%, rose to 23.8% of group gross profit from 16.3% in FY25, while bringing software configuration in-house lifted supply margin to 13.5%. FY26 showed what this mix can do: PAT rose 33.3% to RM9.4m on revenue growth of only 6.4%, even as SMART 600 revenue eased and integration revenue fell 6.5%. The planned recruitment of in-house M&E engineers and project managers is also intended to reduce reliance on subcontractors, which account for 65.6% of cost of sales, offering a further lever on margins.

Expanding beyond Sarawak and up the value chain. The Group is broadening both its footprint and its offering. Peninsular Malaysia rose to 23.5% of FY26 revenue from 18.5% in FY25, and recent wins such as the KL International Airport maintenance contract and a railway network project extend that reach. IPO proceeds will fund a larger Klang Valley office, permanent offices in Bintulu and Kota Kinabalu and a new office in Johor Bahru, alongside c.60 new hires over 2027–2029. In parallel, the Group is moving into software. It has subscribed to Raychange’s digital twin platform since December 2025 and, in 2026, secured two proof-of-concept POs in Sarawak, for a water treatment plant and for disaster situational awareness. A July 2026 MOU with KeenData adds data and AI foundational software for telcos and utilities, and a RM2.1m Digital Innovation and Solutions Centre will showcase these solutions. Sold by subscription or followed by maintenance contracts, they offer a path to higher-margin recurring revenue on top of the infrastructure the Group has already built.

A cash-generative, asset-light balance sheet funds growth. The business needs little capital, with capex of just RM0.6m in FY26, yet generated a ROE of 29.7%. Operating cash flow recovered to RM10.1m, exceeding PAT, and the Group ended FY26 with net cash of c.RM28.8m. The Public Issue adds RM21.3m of gross proceeds, and the Group has a further RM40.2m of unutilised banking facilities, giving it ample capacity to fund working capital, its expansion plans and larger contracts without stretching the balance sheet. The Group paid out 56.5% of FY25 earnings as dividends and, although there is no fixed dividend policy, its cash generation leaves room for distributions as earnings grow.