ALEC Holdings: Beyond the near-term noise – disciplined execution, healthy growth, undemanding valuation... Remain OW

研报英文原文证据摘录

ALEC Holdings: Beyond the near-term noise – disciplined execution, healthy growth, undemanding valuation... Remain OW

th an FY 26E dividend yield of 7%, which looks quite Style Exposure

compelling in the context of the local cyclicals peer group (real estate and

construction names). Key downside risks to our thesis include weaker award

momentum/backlog replenishment and delays in execution, while an in-line

delivery with the MT guidance could result in upside surprises.

• FY 26E P&L looks healthy despite some hiccups: We expect a healthy P&L

delivery in FY 26E with group revenues +51% YoY driven by an elevated

backlog burn rate on key projects (Wynn Al Marjan and Stargate data centre)

while gross margins are expected to come under pressure (GPM at 9.4% in FY

26E; -110bps YoY and below management guidance of 10.3%) driven by

disruption to operations in H1 26 given the regional conflict impact on

productivity. That said, our EBITDA margins are projected at 8.3% in FY 26E

(-50bps YoY and below guidance of 8.5%) while EPS growth is projected at

+54% YoY.

• Healthy MT profile despite conservative JPMe vs. guidance: Beyond FY

26E, the picture looks trickier given the elevated backlog burn rate YTD

(backlog/sales at 1.5x in H1 26E on annualised basis vs. 2.4x in FY 25; FY

27-28E average at 1.6x vs. MT guidance of 2.0-2.5x range) which will drive

slower revenue growth on our estimates (FY 27-28E growth at 1% vs. guidance

at c. 7-8% CAGR). In addition, we continue to adopt a more conservative

approach on the margin front, with our MT gross and EBITDA margins

averaging 9.8% and 9.0%, respectively (40bps/70bps improvement vs.

guidance of 100bps/150bps improvement) on the back of higher competition,

disruption to logistics routes amid the current conflict and construction