MHB recorded a 45% contraction in revenue for FY 2025, down from RM3.61 billion to RM1.98 billion, primarily due to the completion of major Heavy Engineering projects and several major projects nearing completion, while newly secured contracts remain in early execution phases and have yet to contribute meaningfully to revenue. The Company secured RM1.00 billion in new orders during the year but the total order book has reduced to RM4.06 billion from RM5.26 billion.

Premised on the above, what specific order book replenishment strategy does the management have to prevent further revenue gaps in FY 2026? Furthermore, of all the tender book previously identified, what is the “quality-over-quantity” filter being applied to ensure the Group does not return to the loss-making?

FY2025 marks the end of BIMB’s LEAP25 five-year strategic roadmap, with most targets reportedly achieved (page 81 of IAR2025). Nonetheless, the Group fell short of sustaining a recently revised cost-to-income ratio (CIR) target of 63%-64%, which is a notable upward revision from the original 57% set at the start of the plan. BIMB ended FY2025 with a CIR of 66.1% compared to 64.5% in the preceding year.

1. The increase in CIR was largely driven by higher operating expenses rising at 9% y-o-y, outpacing the 6.4% growth in net income (page 27 of IAR2025).In particular, personnel expenses rose by 7.38% (RM68.9 million) to RM1.0 billion, while establishment expenses increased significantly to RM391.4 million from RM320.3 million, mainly due to higher IT-related investments.

• • What were the key drivers behind the Group’s inability to contain operating expenses within the revised CIR target, despite the target being adjusted upward during the plan period?
  • To what extent were these cost pressures anticipated at the time the CIR target was revised, and does this indicate shortcomings in management’s forecasting, cost discipline, or execution?
  • Specifically, were the higher establishment expenses, particularly IT and digitalisation investments that require long-term planning, fully incorporated into the revised CIR assumptions? If so, why did actual outcomes still deviate materially from the target?

2. Meanwhile, the return on equity (ROE) target at the conclusion of LEAP25 was revised downward to 7% recently, from the original 10%. BIMB delivered an ROE of 7.1% in FY2025.

Given the Group’s track record of achieving ROE in the range of 7.6% to 8.4% between FY2021 and FY2024 (page 102 of IAR2025), the revised 7% target appears relatively modest and readily attainable.

• • How does management justify setting a target that is below the Group’s recent historical performance? What were the key assumptions and considerations underpinning the decision to lower the ROE target from 10% to 7%?
  • Does the downward revision reflect a reassessment of the Group’s structural profitability? What are the underlying constraints limiting the capability to achieve a higher ROE?

There was a 19.6% dip in revenue and a significant drop in net profit (PATMI) primarily due to reduced energy and capacity payments at Tanjung Bin Energy (TBEPP) and Tanjung Bin Power Plant (TBPP) following a fire at the FGD system and rotor issues. What is the long-term technical remediation plan to ensure these high-impact outages do not recur, and what are the projected maintenance costs for these specific repairs in 2026?

The Company recognised a fair value gain on investment properties amounting to RM7.43 million and RM4.89 million for the FY 2024 and FY 2025 respectively. Property investment contributed RM3.75 million segment profits (inclusive of 1.63 million non-cash income) during FY 2025.

1. What is the actual rental yield of the investment properties?
2. It was also mentioned on Page 10 of the Annual Report 2025 that investment properties provide a stable recurring income stream through rentals, which shields the Group from volatility in other sectors.

However, the property investment segment appears to be a significant contributor to the Group’s overall profitability of RM5.55 million for FY 2025, supported by both rental income and fair value gains.

Does the Group intend to rely on property investment and rental income as a sustainable earnings pillar? How should shareholders assess the Group’s long-term growth strategy and earnings profile?

The 2025 investigation report specifically noted that a cumulative soil settlement of 24.3 cm led to a 15.9 cm pipeline shift over a 25-year period. Since this was a gradual progression rather than a sudden event, and given that significant portions of the Company’s traverse similar geological profiles, what specific enhancements have been made to pre-emptively detect such movement? Furthermore, how is the Company ensuring that the current monitoring frequency is sufficient to identify these slow-onset risks before they reach a critical point?