Orderbook replenishment will be driven by its RM800m tender pipeline, supported by steady demand for co-generation and power-related projects.
Near-term growth is expected to be driven by the generator set power segment, supported by market consolidation and rising reliability requirements from Tier-4 data-centre operators.
The strategic collaboration with Solar Turbines positions KENERGY to capture new opportunities as demand for on-site generation continues to expand.
Current capacity allows the company to execute projects exceeding c.RM100m in cumulative value, with flexibility to scale up to c.RM200m through qualified subcontractors under KENERGY’s supervision.
Maintain BUY recommendation with an unchanged target price of RM1.02, based on 19x FY26F EPS of 5.3sen.
We came away from our site visit to KENERGY’s Factories 1 and 3 in Ipoh, Perak, feeling more reassured in the Group’s operational capabilities and growth prospects. Key highlights are as follows:
Strong Order Book and Robust Tender Pipeline. KENERGY’s outstanding order book is estimated at c.RM124.8m, with about 70% contributed by renewable-energy and co-generation projects, 25% from industrial process equipment, and the remainder from industrial-plant works. Near-term orderbook replenishment will be driven by its RM800m tender pipeline, supported by steady demand for co-generation and power-related projects. As the authorised distributor and integration partner for Rolls-Royce MTU engines in Malaysia, KENERGY is well positioned to capitalise on rising demand from Tier-4 data-centre developments. MTU generator sets are known for their high performance and reliability, sustaining load factors of up to c.85% vs c.70% for standard industrial engines while maintaining 99.999% uptime, enabling operators to achieve high reliability with fewer units, which in turn optimises space utilisation and reduces overall project costs. As the generator set market continues to consolidate amid supply constraints, we anticipate a steady increase in demand for the MTU systems.
Strategic Partnership with Solar Turbines. KENERGY’s partnership with Solar Turbines Inc., a subsidiary of Caterpillar, strengthens its foothold in gas-turbine-based co-generation and prime-power systems that are increasingly adopted by data-centre and industrial clients seeking reliable, high-efficiency power. Solar Turbines’ modular units, ranging from 1MW to 30MW, are engineered for high operational efficiency and rapid start-up capability, making them well suited for continuous-duty applications in small- to mid-scale developments. These systems can also operate as small gas-fired power plants in open-cycle gas turbine (OCGT) or combined-cycle gas turbine (CCGT) configurations, providing developers with reliable on-site generation solutions that enhance energy security. We believe KENERGY’s early involvement, including an ongoing close-to-RM40m co-generation project and growing client interest, positions the Group to capture new opportunities as demand for on-site generation continues to expand.
Integrated Execution Model. KENERGY’s strength lies in delivering highly customised, project-specific solutions, with up to 60% of components for major projects fabricated in-house, ensuring tighter control over cost, quality, and delivery timelines. The Group operates three certified fabrication plants spanning more than 150,000sq ft, supported by about 120 personnel, including 40 engineers across mechanical, process, and design disciplines. Current capacity enables the company to execute three to four concurrent mid-sized projects (c.RM100m cumulative value) and scale up to c.RM200m through qualified subcontractors under KENERGY’s supervision. These capabilities enable KENERGY to deliver complex, high-specification systems reliably for global OEMs such as Solar Turbines and Rolls-Royce MTU systems, while capturing larger opportunities in Malaysia’s expanding power and energy infrastructure market.
Earnings Revision. We maintain our earnings forecasts, as recent developments remain within our existing assumptions.
Valuation. Maintain our BUY recommendation on KENERGY with an unchanged TP of RM1.02, based on 19x FY26F EPS of 5.3sen. We remain positive on the Group’s outlook, supported by: (i) up to 60% in-house component fabrication, enhancing cost control and project execution; and (ii) distribution status for Rolls-Royce generation sets and Solar Turbines, providing exposure to the accelerating data centre investment cycle and growing mission-critical power opportunities.
Risks. Rising steel and metal plate prices and slower-than-expected order book replenishment.
Disclaimer
The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.
Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.
Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.
| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.111095 | 4.143895 |
| EUR | 4.789157 | 4.798654 |
| CNY | 0.581054 | 0.581649 |
| HKD | 0.528955 | 0.533187 |
| SGD | 3.160793 | 3.186131 |