CBH Engineering Holding Berhad - Third Contract Win in 2025; More Jobs on the Horizon
Mon, 25-Aug-2025 07:43 am
by Tan Sue Wen • Apex Research

Counter

CBHB (0339)

Target Price (RM)

0.50

Recommendation

Buy

  • CBHB has secured a RM52.8m contract for the design and build of a 132kV consumer landing station to support a proposed data centre in Selangor. The contract lifts its outstanding order book to RM501.9m, equivalent to 1.8x FY24 revenue.

  • Assuming a conservative GP margin of 25%, the project is expected to generate c.RM13.2m in gross profit over 20 months, with c.RM2.2m recognised in FY25F and c.RM11.0m in FY26F.

  • Following this win, CBHB has exceeded our FY25F order book replenishment assumption of RM405m. We raise our FY25F replenishment assumption to RM560m, while maintaining our projections for FY26F and FY27F. Accordingly, earnings forecasts are revised upward by 3.8%/19.8%/17.7% for FY25F/FY26F/FY27F.

  • Maintain BUY with a higher TP of RM0.50 (from RM0.41), based on 15x FY26F EPS of 3.3 sen and supported by a three-star ESG rating.

 

RM52.8m Contract.CBHB has secured a RM52.8m contract from a Malaysian company for the design and build of a 132kV consumer landing station (CLS) to support a proposed data centre (DC) in Selangor. The scope includes the supply, erection, installation, testing, and commissioning of HV and MV substation equipment. The project commenced on 8 Jul 2025 and is scheduled for completion by 27 Feb 2027.

 

Our Take. We view the award positively, as it marks a new customer win and should sustain earnings growth through FY26F. It also represents CBHB’s third contract secured in FY25, lifting total YTD wins to RM419.5m. Assuming a conservative GP margin of 25%, the contract is expected to generate c.RM13.2m in gross profit over 20 months, with c.RM2.2m recognised in FY25 (2.9% of our revised FY25F forecast) and c.RM11.0m in FY26 (9.0% of our revised FY26F forecast). Execution risks appear manageable given CBHB’s track record in HV substation works. After incorporating this wins, CBHB’s outstanding order book is estimated at RM501.9m (1.8x FY24 revenue), strengthening medium-term earnings visibility.

 

Outlook. We expect DC job momentum to continue, supported by hyperscaler investments in DC and AI infrastructure. In 2Q2025 alone, Johor approved 42 new DC projects and is the first state in Malaysia to adopt of Tier 4 technology, which requires more complex, higher-specification power infrastructure. Recently, CBHB also ventured into TNB tenders (33kV/132kV) with project value of less than RM100m. We see this as a positive move to diversify away from heavy reliance on the private sector DC. We remain confident that CBHB can secure more HV substation jobs given its proven execution record and the capacity of its current project team to take on an additional c.RM200m in jobs without straining resources. The tender book remains robust at c.RM700m, with about 50% linked to DC-related projects and a historical win rate of c.20%.

 

Earnings revision. Following the recent contract win, CBHB has exceeded our FY25F order book replenishment assumption of RM405m. We now raise our FY25F replenishment assumption to RM560m, while maintaining our projections for FY26F and FY27F. Accordingly, our earnings forecasts are revised upward by 3.8%/19.8%/17.7% for FY25F/FY26F/FY27F respectively.

 

Valuation & Recommendation. We have revised our TP upward to RM0.50 (from RM0.41) after the earnings adjustment, based on 15x FY26F EPS of 3.3 sen and supported by a three-star ESG rating. Maintain BUY. 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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