KUALA LUMPUR: Southern Score Builders Bhd's acquisition of Nova Pharma Solution Bhd is expected to support earnings growth by strengthening the group's technical depth and expanding its service offering into higher value-added segments.
As at Feb 3, 2026, Southern Score and its persons acting in concert had raised their stake in Nova Pharma to 99.5 per cent, triggering a compulsory acquisition of the remaining shares.
TA Securities said the transaction is on track for completion by the first quarter of calendar year 2026, allowing full consolidation of Nova Pharma into the group.
The research house said Nova Pharma's strengths in engineering consultancy and project management span the entire project lifecycle, from design and validation to commissioning.
These capabilities position Southern Score to bid for more complex and high-specification pharmaceutical and biotechnology projects, where regulatory requirements are stricter and competitive intensity is lower.
The company expects the enhanced capabilities to lift tender success rates and enable participation in high-technology projects with higher entry barriers and superior earnings margins.
From a financial perspective, TA Securities said Nova Pharma has a higher margin profile, with a net profit margin of about 40 per cent, shorter project durations of typically 12 to 18 months, and an established client base in the life sciences sector.
These attributes are expected to enhance group earnings quality and margin resilience, despite Nova Pharma's relatively smaller outstanding order book of RM64.5 million as at June 30, 2025.
Overall, TA Securities believes the acquisition meaningfully broadens Southern Score's addressable market, supports diversification beyond traditional property-related work and strengthens near-term visibility for order book replenishment.
The research house also highlighted Nova Pharma's positioning to benefit from the development of the Johor-Singapore Special Economic Zone, which is expected to drive sustained foreign direct investment into southern Malaysia.
Singapore-based multinational biotechnology and pharmaceutical companies are increasingly looking to establish manufacturing facilities in Johor, drawn by cost efficiencies, land availability and proximity to Singapore.
Johor remains Nova Pharma's key growth and execution market, with the company already receiving multiple enquiries from Singapore-based clients.
TA Securities expects this pipeline to translate into a steady flow of new job wins, supporting order book replenishment visibility.
Southern Score's total outstanding order book stands at RM1.44 billion, comprising RM1.2 billion under Southern Score and RM243.9 million under Southern Johor Engineering Excellence Sdn Bhd.
This represents about 6.5 times coverage of financial year 2025 revenue and underpins earnings visibility over the next three years.
Year to date in financial year 2026, the group has secured RM234.8 million in new jobs, representing about 24 per cent of TA Securities' full-year new job win assumption of RM1 billion.
Despite slower-than-expected replenishment, the research house believes the group remains on track to secure the balance.
TA Securities noted that Southern Score has a healthy and visible tender pipeline of about RM1 billion, comprising RM648 million under Southern Score and RM394.3 million under Southern Johor Engineering Excellence.
Near-term potential awards under Southern Score include the Ayer Keroh Hospital project worth about RM200 million from Radium Development, as well as several residential developments from Platinum Victory.
Meanwhile, the Southern Johor segment's tender book is largely skewed towards data centre-related mechanical and electrical works, with several projects at an advanced stage and likely to be concluded in the near term.
Given its view that Southern Score remains on track to meet new job win assumptions, TA Securities said it has kept its earnings forecasts unchanged.
The research house maintained its "Buy" call on Southern Score with an unchanged target price of 81 sen, based on 16 times calendar year 2027 earnings per share.
This is underpinned by solid earnings visibility, a strong unbilled order book, exposure to the high-growth data centre segment and robust double-digit net margins.