CBH Engineering Holding Berhad - Another Win for CBHB
Tue, 23-Sep-2025 07:41 am
by Tan Sue Wen • Apex Research

Counter

CBHB (0339)

Target Price (RM)

0.50

Recommendation

Buy

  • CBHB has secured a RM31.4m contract for mechanical and electrical works at a 132kV consumer landing station (CLS) to support a proposed data centre in Johor. The contract lifts its outstanding order book to RM533.3, equivalent to 2.0x FY24 revenue.

  • Assuming a conservative GP margin of 25%, the project is expected to generate c.RM7.9m in gross profit over six months, with c.RM3.2m recognised in FY25F and c.RM4.7m in FY26F.

  • No changes to our earnings forecasts, as the contract win is within our FY25F order book replenishment assumption.

  • Maintain BUY, with an unchanged TP of RM0.50, based on 15x FY26F EPS of 3.3 sen, supported by a three-star ESG rating.

     

RM31.4m Contract in Johor. CBHB has secured a RM31.4m contract from an undisclosed main contractor for mechanical and electrical works at a 132kV consumer landing station (CLS) to support a proposed data centre in Johor. The scope covers supply, installation, testing and commissioning of M&E systems. The project commenced on 7 Sep 2025 and is scheduled for completion by 10 Mar 2026.

 

Our Take. We view the award positively, as it should sustain earnings growth through FY26F. This marks a new client win (Customer A), demonstrating CBHB’s ability to broaden its client portfolio. The contract lifts total YTD wins to RM450.9m. Assuming a GP margin of 25%, the contract is expected to generate c.RM7.9m in gross profit over six months, with c.RM3.2m recognised in FY25 (4.2% of our FY25F forecast) and c.RM4.7m in FY26 (3.8% of our FY26F forecast). We see limited execution risk, such as delays or cost overruns, as the scope is well within the group’s core expertise in M&E and HV substation installations. Following this award, CBHB’s outstanding order book is estimated at RM533.3m (2.0x FY24 revenue), strengthening medium-term earnings visibility.

 

Outlook. We see no signs of a slowdown in Malaysia’s data centre build-out. According to TNB’s latest analyst briefing, 47 projects with a combined 6.7GW of maximum demand have signed electricity supply agreements (ESA) as of 15 Aug 2025. Of these, 24 projects (3.5GW) were delivered as at 1HFY2025, including 740MW in 2QFY2025, while the remaining 3.2GW is under execution. This sizeable backlog underpins sustained demand for HV substations over the next 12-24 months. In addition, CBHB has also ventured into TNB tenders (33kV/132kV) with project values of <RM100m, diversifying its revenue base away from heavy reliance on private-sector data centres. We believe CBHB is well-positioned to capture additional substation jobs, backed by its solid execution record and capacity to absorb additional c.RM150m in new contracts without straining resources. The tender book remains robust at c.RM650m, with around 50% linked to private data centre infrastructure and a historical win rate of c.20%.

 

Earnings revision. We make no changes to our earnings forecasts, as the latest contract win falls within our FY25F order book replenishment assumption of RM560m.

 

Valuation & Recommendation. We maintain our BUY call with an unchanged TP of RM0.50, derived from 15x FY26F EPS of 3.3 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. High exposure to the DC sector, inability to secure new contracts, and unexpected project delays.

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