KUALA LUMPUR (Nov 1): SKB Shutters Corp Bhd (KL:SKBSHUT), a specialist in roller shutters, steel doors, and storage systems, is expected to see stronger earnings growth from the shutters and doors segment, driven by more projects ahead, according to Tradeview Research.

In a research report on Friday, Tradeview Research analyst Tan Jia Hui initiated a “buy” call on SKB Shutters with a target price of RM1.24, based on financial year ending June 30, 2025 (FY2025) price-earnings ratio (PER) of 10 times, which is in line with its indirect peers serving the same industry.

Tradeview Research’s current revenue projection of 3%-10% for FY2025-FY2027 is lower than the last two to three years of 15%-50%, given the concerns over constraint of its capacity and the delivery timeline of its customers, mainly from the industrial sector.

“We believe that SKB Shutters can benefit from the resurgence of increased investment in the industrial sector in Malaysia, as they are the preferred supplier of roller shutters, steel doors and rack systems for major multinational corporations (MNCs) and contractors,” she wrote.

Tan pointed out that SKB Shutters’ new plant, which is due to be completed in 2025, will start contributing meaningfully from FY2027.

“SKB Shutters could also benefit from the increase in infrastructure projects around the region, as they were also the supplier for several key infrastructure projects like mass rapid transit (MRT) Line 1 and Line 2 in Kuala Lumpur, and the Changi International Airport in Singapore,” she elaborated.

Apart from industrial and infrastructure projects, Tradeview Research believed SKB Shutters could also benefit from the rise in data centre projects in Malaysia, given its previous track record as data centre-related projects had contributed to around 20% of its revenue in FY2023.

“It was reported that Malaysia's data centre [sector] is expected to increase its capacity by 1.2GW, which represents 600% growth over the next five years, and growing.

“Shutters and steel doors for data centres also have higher margin due the required product specification with shorter delivery timelines. We believe there could be upside surprises to our forecast, as we have only factored in a 10% of revenue from the data centre project,” said Tan.

At the time of writing, shares of SKB Shutters were down 2.5 sen or 3% at 74 sen with a market capitalisation of RM103 million. Tradeview Research’s target price of RM1.24 represents a potential upside of 67.5%.