CBHB has secured a RM172m contract for the design and construction of a 275kV/13.8kV consumer substation to support a proposed data centre in Selangor. This contract win bumps the unbilled order book to RM312m, equivalent to 1.1x FY24 revenue.
Near-term job flow is expected to remain robust, driven by healthy pipeline of ESAs signed for DCs. By year-end, an additional 10 ESAs are projected to be signed. We estimate the ESA signed for the year to collectively require the construction of at least 15 additional high-voltage substations, excluding any additional redundancy requirements typically associated with DCs.
CBHB’s proven expertise and established track record in delivering HV substation projects position the company favourably to secure further contracts and capitalise on the accelerating demand for DC infrastructure in the region.
No change to our earnings forecasts as the contract win is within our order book replenishment assumption.
Maintain BUY recommendation with an unchanged target price of RM0.38, based on 15x FY26F EPS of 2.5 sen and a three-star ESG rating.
RM172.0m Contract. CBHB has been awarded a contract valued at RM172.0m by a Malaysian company for the design and construction of a 275kV/13.8kV consumer substation to support a proposed data centre (DC) in Selangor. The scope of work includes the design, supply, installation, testing, and commissioning of the electrical supply system and all associated civil works. The project is scheduled to run for 14 months starting July 2025, with targeted completion by mid-September 2026.
Our Take. We view the contract award positively, as it should sustain CBHB’s earnings over the next two financial years. Based on a conservative GP margin of 25%, they are projected to generate a total GP of c.RM43.0m across the 14-month contract. This is expected to translate into c.RM15.4m to be recognised in FY25 (22% of our FY25F forecast) and c.RM27.6m in FY26 (30% of our FY26F forecast). We anticipate no execution challenges, given CBHB’s strong track record of successful execution and timely delivery. Incorporating the recent win, CBHB’s outstanding order book is estimated at RM312m, representing 1.1x of FY24 revenue.
Outlook. We expect job momentum to remain strong in the near term, supported by the robust pipeline of Electricity Supply Agreements (ESAs) signed for DC projects. To recap, during TNB’s latest analyst briefing, the management highlighted the signing of 5 ESAs for DC projects with 666MW of maximum demand in 1QFY25 alone, and expects another 10 ESAs signed for DC projects (averaging 150MW-200MW capacity each) by year-end. We estimate this could collectively require at least 15 additional HV substations (1 for each ESA), not including potential redundancy requirements for DCs. Backed by its proven track record in delivering DC-related substation works, the Group is well positioned to capture additional job opportunities, ensuring its growth prospects remain intact.
Earnings revision. No change to our earnings forecasts as the contract win is within our order book replenishment assumption.
Valuation & Recommendation. We maintain our BUY recommendation with an unchanged TP of RM0.38 based on 15x FY26F EPS of 2.5 sen and a three-star ESG rating. We remain positive on CBHB, given its (i) strategic role as a proxy for Malaysia’s rising power demand, (ii) established track record in delivering HV substations tailored for DC operators, and (iii) robust supplier relationships that enable cost-efficient procurement.
Risks. High exposure to the DC sector, inability to secure new contracts, and unexpected project delays.
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