CBH Engineering Holding Berhad - Within Expectations
Thu, 21-Aug-2025 07:56 am
by Tan Sue Wen • Apex Research

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CBHB (0339)

Target Price (RM)

0.41

Recommendation

Buy

  • CBHB’s 2QFY25 CNP stood at RM9.9m (+72.5% QoQ), bringing 6MFY25 CNP to RM15.7m. While this accounts for only 43% of our FY25F forecast, we deem the results within expectations as we anticipate stronger quarters ahead, supported by accelerating revenue recognition from existing contracted projects and a robust order book of RM449.1m, equivalent to 1.7x its FY24 revenue.

  • Outlook remains positive, anchored by Johor’s expanding pipeline of Tier-4 DC investments, which demand increasingly sophisticated and high-redundancy electrical systems. Recent sizeable project wins collectively worth RM366.7m, including one from a renowned global data centre player, further reinforce confidence in CBHB’s execution in the DC segment.

  • Maintained our BUY recommendation with an unchanged target price of RM0.41, based on 15x FY26F EPS of 2.8sen and supported by a three-star ESG rating.

 

Within expectations. After adjusting for one-off items (+RM0.1m), CBHB’s 2QFY25 core net profit (CNP) came in at RM9.9m, bringing 6MFY25 CNP to RM15.7m. While this accounts for only 43% of our FY25F earnings forecast, we deem the results within expectations. We expect performance to improve in the coming quarters, supported by accelerating revenue recognition from existing contracted projects and a robust order book of RM449.1m, boosted by the recent award of two sizeable projects with a combined value of c.RM366.7m.

 

QoQ. 2QFY25 CNP surged 72.5% to RM9.9m, primarily driven by stronger contributions from the M&E Systems division as construction activities normalised post-festive downtime in 1QFY25, leading to higher revenue recognition from ongoing projects. This was reflected in topline growth of 63.8%, with M&E continuing to account for the majority of revenue. CNP margin expanded slightly by 0.3%-pts to 16.6%, likely supported by increased contributions from private data centre (DC) substation projects that typically command better margins.

 

YoY. As CBHB was only listed in early 2025, there is no YoY comparison available.

 

Outlook. CBHB’s earnings are expected to strengthen in the coming quarters, supported by accelerating revenue recognition from contracted projects entering the execution stage. Order book replenishment is also set to gain momentum in 4Q and beyond, with YTD replenishment already achieving 90% of the internal target. Malaysia’s DC construction pipeline remains robust (522MW completed, 1,250MW under construction, 3,750MW planned), implying demand for at least 35 new HV substations over the medium term based on our estimates. With RM366.7m of recent contract wins, including from a leading global DC player, CBHB is well-positioned to secure further high-value HV substation projects, particularly in Johor’s Tier-4 DC segment, driving orderbook expansion and enhancing earnings visibility.

 

Earnings revision. No change to our earnings forecasts.

 

Valuation & Recommendation. We maintain our BUY recommendation on CBHB with an unchanged TP of RM0.41, based on 15x FY26F EPS of 2.8 sen and supported by 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. Policy risks. Inability to secure new contracts. Spike in raw material costs such as copper and steel.

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