Cheeding Holdings Berhad - RM13.5m Contract from TNB
Thu, 11-Dec-2025 07:54 am
by Ong Tze Hern, Tan Sue Wen • Apex Research

Counter

CHEEDING (0372)

Target Price (RM)

0.96

Recommendation

Buy

  • CHEEDING has secured a RM13.5m contract from TNB for the PMU 132/11kV Genting Sempah extension and associated dismantling, reinstatement and commissioning works. This lifts the Group’s unbilled order book to RM231.7m (2.0x FY25 revenue), strengthening medium-term execution visibility.

  • Earnings contribution is expected to be phased across FY26F-FY28F in accordance with the 540-day contract cycle, with strongest recognition projected in 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 RM0.96, based on 20x FY27F EPS of 4.8sen.

RM13.5m Contract. CHEEDING, via its wholly owned subsidiary Pembinaan Bukit Cheeding Sdn Bhd (PBCSB) and Orasko Sdn Bhd (OSB) under an unincorporated joint venture on a 60:40 basis, has secured a RM13.5m contract (inclusive of SST) from Tenaga Nasional Berhad (TNB) for the PMU 132/11kV Genting Sempah extension works in Pahang. The scope comprises the dismantling of existing 132kV primary equipment and the supply, installation, testing and commissioning of new primary systems and steel structures, including civil modifications to plinths, completion of secondary systems (remote end included), and installation of new low-level gantries and steel pole foundations. The contract is effective from 9 December 2025 and provides for a 540-day completion period from the commencement date to be confirmed.

 

Our Take. We view the contract positively, as it supports earnings growth through FY28. Assuming a GP margin of 30% and after stripping out SST, the project is expected to deliver RM3.8m in gross profit over its duration, based on the assumption that works commence immediately upon LOA issuance. This translates into RM0.2m in FY26F (0.3% of our FY26F forecast), RM2.1m in FY27F (3.3% of our FY27F forecast) and RM1.5m in FY28F (2.0% of our FY28F forecast). Execution risks remain manageable, supported by CHEEDING’s established delivery track record and healthy balance sheet. Post-award, the Group’s outstanding order book is estimated at RM231.7m (2.0x FY25 revenue), reinforcing its medium-term earnings visibility.

 

Outlook. Order book replenishment is expected to remain robust, supported by accelerating data-centre power demand, electrification drive and sustained grid investment cycles. With improved balance-sheet flexibility post-IPO and established technical capabilities, we reckon CHEEDING is well positioned to secure upcoming transmission and substation-related packages, supporting a more visible earnings trajectory. The current tender pipeline of c.RM280m is anticipated to widen as enhanced financial headroom enables participation in higher-value and more technically intensive bids.

 

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 RM0.96, based on 20x FY27F EPS of 4.8sen. 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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