• SKA Capital Berhad is a power infrastructure engineering solutions provider with ~17 years of track record, principally involved in the (i) provision of substation engineering services encompassing EPCC, civil and structural as well as electrical and mechanical engineering works, (ii) underground utilities engineering services and (iii) trading of electrical devices, electrical equipment and construction materials  
• We project 3-year earnings CAGR of 24.8%, with core PATMI expected to reach RM31.3m-RM42.3m over the next three years. This growth is underpinned by (i) TNB’s committed capex of RM18.0bn for 2026, (ii) data centre-driven demand for substations and underground cabling and (iii) the Group’s step-up into higher-value EPCC and underground utilities works.
• We assign a fair value of RM0.66 per share for SKACAP, indicating a 53.5% upside from the IPO price of RM0.43. This valuation is based on a PE ratio of 16.5x, pegged to FY27f EPS of 3.99 sen.

Investment highlights

Value-chain upgrade via Reltency Engineering. In Feb 2025, SKA Rekabina subscribed for a 70% equity interest in Reltency Engineering for RM5.0m, extending the Group beyond its legacy civil and structural works into higher-value engineering, procurement, construction and commissioning (EPCC) and electrical and mechanical engineering services for power substations. Unlike many EPCC contractors that rely on external subcontractors for civil and structural works, SKACAP can now undertake these works in-house within its EPCC packages, giving the Group greater control over cost and timelines as well as more flexibility when tendering. The impact was immediate, as EPCC and electrical and mechanical works contributed a combined RM96.8m or 40.1% of FY25 revenue, while Reltency’s 13-year working relationship with TNB brought the national utility directly onto the Group’s customer list.

Pivot into underground utilities with in-house HDD capability. SKA secured its first underground utilities engineering services project in 2025, securing an RM50.0m project involving the installation, testing and commissioning of 11kV underground cables and accessories, and the segment has since scaled from nil in FY24 to RM9.5m in FY25 and RM25.7m or 21.5% of 5M FPE26 revenue. The Group intends to channel RM12.1m of IPO proceeds into machinery and equipment, including five horizontal directional drilling (HDD) machines, allowing it to undertake horizontal directional drilling in-house rather than outsourcing to subcontractors. We view that insourcing HDD could protect SKACAP’s margins and strengthen the Group’s competitiveness in tendering for larger cable-laying packages.

Positioned for data centre-driven power demand. SKA has an established delivery record in data centre-linked power infrastructure, having completed the Kempas Lama data centre landing station in Johor (RM55.0m, its largest contract to date) and a 132kV main switching station for a Selangor data centre (RM14.6m). Its ongoing Elmina projects (RM81.1m combined) involve underground utilities works for a data centre and substation, illustrating the pull-through from hyperscale investments into grid connection works. With TNB’s RM18bn capex plan to fund large-scale grid modernization efforts and clean energy transitions across Malaysia, we believe this would create more tender opportunities for SKACAP.

Order book of RM313.4m provides two-year revenue visibility. As at 21 Sept 2026, SKA’s outstanding order book stood at RM313.4m, of which RM79.6m is expected to be recognised over the remainder of FY26 and RM233.8m in FY27, providing two-year revenue visibility. The RM313.4m order book also represents ~2.2x of SKACAP’s average past 3-years revenue of RM145.9m, based on FY23 to FY25. Again, with TNB’s RM18bn capex commitment, coupled with the purchase of more machinery and equipment post-IPO and RM21.0m allocated as performance bond for future projects, we believe SKACAP is able to tender for more projects moving forward, including higher-voltage 500kV transmission substations, where the Group already has a track record dating back in 2014, and also the ongoing Bukit Batu and Gurun East 500/275kV substations currently underway.