Protasco Berhad: A High-Growth Earnings Story in Malaysia's Booming Construction Sector

The Malaysian construction sector is undergoing a renaissance, driven by government-led infrastructure spending and a strategic pivot toward digitalization and sustainability. Amid this backdrop, Protasco Berhad (KLSE: PRTASCO) has emerged as a standout performer, with earnings per share (EPS) growth that dwarfs industry averages. For long-term investors, the company's trajectory raises compelling questions: Can Protasco sustain its remarkable EPS expansion, and does its strategic focus align with the structural tailwinds reshaping Malaysia's construction landscape?

A Decade of Explosive EPS Growth

Protasco's recent financial performance is nothing short of extraordinary. Over the past five years, the company has delivered an average annual EPS growth rate of 47.9%, a figure that eclipses the construction industry's 22.8% average, according to Simply Wall St.. In the past 12 months alone, EPS surged from RM0.038 to RM0.11-a 188% increase, per Fintel. This acceleration is not a statistical anomaly but a reflection of strategic discipline. By divesting its loss-making education segment and doubling down on its core road maintenance and construction operations, Protasco has transformed its earnings profile. For instance, Q2 2025 results showed a basic EPS of RM0.054, up from RM0.002 in the same period in 2024, in Protasco's Q2 FY2025 announcement.

The company's order book further underscores its momentum. With RM200 million in federal road upgrading projects and a RM2 billion tender pipeline focused on hospitals, flood mitigation, and water infrastructure, according to an i3investor blog post, Protasco is well-positioned to capitalize on Malaysia's infrastructure boom. These projects are not merely short-term wins; they represent recurring revenue streams that align with the government's long-term goals, including Malaysia's ASEAN chairmanship in 2025 and the Visit Malaysia Year 2026 campaign, as reported by The Star.

Navigating the EPS Decline: A Temporary Setback or Structural Risk?

Despite its recent success, Protasco faces a critical challenge: earnings per share are projected to decline by 3.5% annually through 2026, according to Simply Wall St.. This forecast, while sobering, must be contextualized. The decline is attributed to rising material costs, operational constraints, and a challenging market environment. However, these headwinds are not unique to Protasco. The broader construction industry is grappling with similar pressures, including labor shortages and environmental compliance costs, according to CIDB.

What sets Protasco apart is its ability to mitigate these risks through operational efficiency. For example, a rate revision for periodic road maintenance works, approved in April 2024, is expected to boost gross profit margins to the mid-teens by FY25, The Star reported. Additionally, the company's robust liquidity-MYR183.9 million in cash and short-term investments-is visible in the Simply Wall St. profile and provides a buffer against volatility. RHB Research has noted that Protasco's strategic focus on high-margin government contracts and its lean balance sheet position it to outperform peers during downturns, as reported by The Star.

Industry Tailwinds: A 4.5% CAGR and Beyond

The Malaysian construction industry is forecast to grow at a 4.5% annual rate from 2026 to 2029, according to a GlobeNewswire report, driven by public infrastructure projects such as the MRT3 Circle Line and Pan Borneo Highway. Protasco's alignment with these initiatives is a key strength. Its 18,000 kilometers of road maintenance concessions and expertise in civil engineering works position it to benefit from the government's MYR64.1 billion education infrastructure allocation and MYR16 billion energy sector spending, according to GlobalData.

Moreover, the industry's shift toward digitalization-via Building Information Modelling (BIM) and modular construction-creates opportunities for Protasco to enhance productivity. While larger players like IJM Corporation and Gamuda Berhad dominate high-profile projects, Protasco's agility and focus on niche segments (e.g., road maintenance) allow it to capture market share without direct competition with these giants, as noted by Data Insights Market.

Risks and Rewards for Long-Term Investors

For investors, the key question is whether Protasco's near-term EPS decline will be offset by long-term growth. The company's projected 11.1% revenue CAGR, according to Simply Wall St., suggests that top-line expansion could eventually reverse the EPS trend, particularly if margin improvements outpace cost pressures. However, this depends on the successful execution of its corporate restructuring and the timely conversion of its RM2 billion tender book into earnings.

Another risk lies in the industry's exposure to macroeconomic factors. A slowdown in government spending or a spike in interest rates could dampen demand. Yet, given Malaysia's commitment to infrastructure as a growth engine-evidenced by the New Industrial Master Plan 2030 and the Johor-Singapore Special Economic Zone-these risks appear manageable, as discussed in a LinkedIn post.

Conclusion: A Compelling Case for Resilience

Protasco Berhad's earnings trajectory is a testament to its strategic adaptability. While the projected EPS decline is a near-term concern, the company's strong order book, operational efficiency, and alignment with industry tailwinds suggest that this is a temporary phase. For long-term investors, Protasco offers a rare combination of high-growth potential and financial discipline-a profile that aligns well with the structural opportunities in Malaysia's construction sector.

As the industry moves toward digitalization and sustainability, Protasco's focus on recurring revenue streams and margin expansion positions it to deliver value over the next decade. In a market where many companies struggle to balance growth and profitability, Protasco's story is one of resilience-and perhaps, a blueprint for success.