Cheeding Holdings Berhad - RM33.9m Contract from TNB ahead of Listing
Thu, 09-Oct-2025 12:22 pm
by Tan Sue Wen, Ong Tze Hern • Apex Research

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CHEEDING (0372)

Target Price (RM)

0.73

Recommendation

Buy

  • CHEEDING has secured a RM33.9m contract from TNB for the design, supply, installation, testing, and commissioning of HV infrastructure to support Computility Technology’s data centre in Johor. This award lifts the Group’s unbilled order book to RM227m, equivalent to 1.9x FY25 revenue.

  • We view the contract award positively, as the short project turnaround cycle allows for accelerated earnings recognition, with the majority of contribution expected in FY26F and the remainder spilling into early FY27F.

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

  • Maintain BUY with an unchanged target price of RM0.73, based on 17x FY27F EPS of 4.3sen.

 

RM33.9m Contract. CHEEDING has secured a RM33.9m contract (inclusive of SST) from Tenaga Nasional Berhad (TNB) (BUY, TP: RM15.77) for the proposed 275kV Bulk Supply to Computility Technology Sdn Bhd’s Plot 1 in Tropicana Development, Gelang Patah, Johor. The project entails interim power supply works for Computility Technology’s upcoming data centre, encompassing the design, supply, installation, testing, and commissioning of high-voltage (HV) infrastructure. The contract commenced on 2 Oct 2025 and is scheduled for completion within 240 days, or by 30 May 2026, based on our calculation.

 

Our Take. We view the contract positively, as the short project turnaround cycle allows for accelerated earnings recognition, with the majority of contribution expected in FY26F and the remainder spilling into early FY27F. Based on our assessment, the scope likely encompasses a balanced mix of underground utilities, transmission line, and substation works, which align with CHEEDING’s core competencies. Assuming a blended gross profit margin of 30%, and after stripping out SST, the project is expected to deliver RM9.6m in gross profit over its duration, with an estimated RM7.2m recognised in FY26F (14.3% of our FY26F forecast) and RM2.4m in FY27F (4.2% of our FY27F forecast). Execution risks are manageable, supported by CHEEDING’s healthy balance sheet and strong net cash position. Post-award, the Group’s outstanding order book is estimated at RM227.0m (1.9x FY25 revenue), reinforcing its medium-term earnings visibility.

 

Outlook. Order book replenishment is expected to strengthen from FY27F, supported by post-IPO proceeds that enhance bidding capacity and ease performance bond constraints, consistent with the Group’s typical 3-6-month tender cycle. Management’s strategic focus on EPCC works for HV overhead lines, underground utility solutions, substations, and data-centre-related infrastructure positions the Group favourably to capture upcoming grid expansion and industrial development opportunities under RP4. The current tender book of c.RM300m is expected to expand further as the Group’s tendering capacity increases following the IPO.

 

Earnings revision. No change to our earnings forecasts as the contract win is within our order book replenishment assumption of RM56m for FY26. 

 

Valuation & Recommendation. Maintain our BUY recommendation on CHEEDING with an unchanged TP of RM0.73, based on 17x FY27F EPS of 4.3sen. We are positive on CHEEDING’s outlook, given its: (i) licensing strength in up to 500kV transmission, (ii) integrated coverage across overhead transmission, underground utilities, and substations, positioning CHEEDING as a one-stop EPCC provider, (iii) proven track record of delivering more than 20 national infrastructure projects, and (iv) strong core net margins (>20%) well above sector averages.

 

Risks. Customer Concentration Risk. Dependence on regulatory and public sector infrastructure spending. Cost overrun risk.

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