Maybank Securities (Thailand) has reiterated its “Buy” recommendation for Stecon Group Public Company Limited (SET: STECON), raising the target price to THB 23.50 from the previous THB 12.50. The revision is based on an earnings estimate upgrade for 2026 – 2028 by 51-70%, an improved multiple for the construction business, as well as an increased valuation of its GULF shareholding.
The outlook for STECON is supported by enhanced clarity and expected growth in its data center projects, projected to significantly boost revenues in 2027 – 2028. Effective cost controls are anticipated to help maintain strong gross profit margins (GPM), with potential for higher-than-expected growth.
Compound annual growth rate (CAGR) for 2026 – 2028 is estimated at 11%, despite a high profit base in 2026. STECON is currently trading at a 2027 P/E of 16 times, below its regional peers in Malaysia, where data center contractors trade at over 20 times P/E. Maybank has shifted its sector top pick from CK (target THB 23) to STECON, citing CK’s lack of immediate catalysts due to delays in government project tenders.
While delays are expected in government project approvals, STECON is seen as resilient, mainly benefiting from anticipated private sector work in late 2026 and early 2027, until government projects resume in the latter half of 2027. Management estimates a high probability of securing approximately THB 50 billion in data center projects in late 2026, with these already having power allocations and thus not expected to be delayed by updated government approval regulations.
The total expected new project value for 2026 – 2028 is THB 204 billion, with private sector work outpacing government contracts. Maybank’s data center project assumptions remain conservative relative to management’s outlook, projecting a record backlog of THB 167 billion and THB 203 billion in 2027 and 2028, respectively.
Data center projects, requiring only 15 – 20 months for completion, allow for swift revenue recognition. The analyst assumes a THB 30 billion project win in early 2027, with revenue recognition beginning in the second quarter, contributing THB 11 billion in 2027 and THB 21 billion in 2028.
Existing backlog and new government contracts are estimated to contribute an additional THB 31 billion and THB 26 billion, driving revenue growth of 13% and 12% to THB 42 billion and THB 46 billion in 2027 and 2028, respectively. Management believes revenue capacity could reach up to THB 50 – 60 billion. GPM is projected to hold at 7.4%, with further upside possible from operational efficiency.
Maybank has revised STECON’s earnings forecast for 2026-2028 upward, reflecting stronger data center revenues, improved margins, higher GULF dividend income, and recurring income from data center investments. Core profit CAGR is projected at 11% for 2026 – 2028, backed by 12% revenue growth. Additional upside remains if STECON wins more data center or government projects or achieves better cost control.
