Highlights

• The tone from the analyst meeting was positive.
   
• STECON continues to lead in the data centre trend, with a strong project
  pipeline.
   
• Maintain BUY with a higher target price of Bt22.00 (previously Bt20.00).           

Analysis

• Positive tone from the analyst meeting. We attended Stecon Group’s
  (STECON) analyst meeting which had a positive tone. The company maintained
  its business targets, including: a) revenue of Bt35b, b) a gross profit margin of
  7%, and c) new backlog of Bt50b.
   
• Gross margin to remain healthy. Gross margin increased to 7.6% in 1H26
  from 7.4% in 1H25, supported by the company’s investment in IT and more
  efficient timing and volume management of construction material orders. Given
  that private projects accounted for around 58% of the backlog at end-2Q26, we
  expect STECON’s gross margin to continue improving. We forecast 2026 gross
  margin at 7.4%, up from 7.3% in 2025.
   
• 2H26 new backlog expected to be driven by data centres. STECON signed
  new contracts worth Bt2.92b in 2Q26, comprising three power plant projects
  worth Bt1.95b, two industrial projects worth Bt810m, and one infrastructure
  project worth Bt40m. This brought 1H26 new backlog to Bt9.74b, representing
  around 19.5% of its 2026 target. STECON believes its Bt50b new backlog target
  remains achievable, driven by private sector projects with a total potential value
  of Bt68.8b, of which 72% is from three data centre projects. The company
  expects the awards of these projects to proceed without significant delays
  despite changes to the data centre regulatory framework. If STECON achieves
  its new backlog target, we expect its year-end 2026 backlog to reach around
  Bt136b, up from Bt123b in 2025.
   
• Well positioned to benefit from data centre demand. STECON has four data
  centre projects which will be recognised as revenue for the next two years.
  Currently, STECON is eyeing three data centre projects that are expected to be
  put up for bidding in 2026. The combined value of these projects has risen from
  Bt22.5b at the previous meeting to Bt49.8b, mainly because they are structured
  as design-and-build contracts, which carry higher project values. The company
  opines that the data centre trend will continue to grow and they should be
  comfortable for the next two years. With STECON’s expertise and its position
  as a market leader in data centre construction projects, we see a high likelihood
  of STECON securing the three data centre projects in the pipeline, worth a total
  of Bt49.8b.