CBHB has secured a RM130.0m contract for the design, engineering, construction, installation, testing and commissioning, as well as the supply of materials, for the extension of an existing 275kV Consumer Landing Station supporting a data centre in Southern Peninsular Malaysia. The award lifts its outstanding order book to RM662.3m (2.4x FY24 revenue).
Assuming Phase 2 follows Phase 1 completion, a 20% gross profit margin, and after stripping out SST, the contract is estimated to generate c.RM24.5m in gross profit over an 11-month duration.
As the contract win exceeded our order book replenishment assumption, we have raised our earnings forecasts by 2-6% for FY26F-FY27F.
Upgrade to BUY (from HOLD) with a higher TP of RM0.50 (from RM0.47), based on 18x FY26F EPS of 2.8 sen, following upward earnings revisions and recent share price weakness.
RM130.0m Contract. CBHB has secured two Letters of Award (LOAs) totalling RM130.0m from an undisclosed Malaysian company for the design, engineering, construction, installation, testing and commissioning, as well as the supply of materials, for the extension of an existing 275kV Consumer Landing Station supporting a data centre located in Southern Peninsular Malaysia. The contract commenced on 23 December 2025. Phase 1 is expected to be completed by 30 April 2026, while Phases 2 and 3 are expected to be completed within seven months, subject to client instruction.
Our Take. We view the award positively, as it represents a new customer win, further strengthening CBHB’s positioning in the DC space and is expected to support earnings growth through FY27F. Assuming Phases 2 and 3 commence following the completion of Phase 1, a 20% GP margin, and after stripping out SST, the contract is estimated to generate c.RM24.5m in GP over the 11-month duration. The bulk of earnings is expected to be recognised in FY26F, with tail-end contributions extending into FY27F. Following this award, CBHB’s outstanding order book is estimated at RM662.3m (2.4x FY24 revenue), supporting medium-term earnings visibility.
Outlook. This represents its sixth contract win YTD, bringing total YTD contract wins to RM601.6m. We expect data centre related substation job momentum to remain resilient over the medium term, supported by ESA signed for c.6.1GW of data centre projects still in the pipeline, which underscores strong demand for HV substation works over the next 12-18 months. In addition, the top four AI data centre operators Amazon, Google, Meta and Microsoft are accelerating AI infrastructure investments, with combined capex expected to exceed US$350bn in 2026, which we believe further supports Malaysia’s attractiveness as a regional data centre hub. With a proven track record in delivering HV substation works, supported by recent data centre related contract wins, we believe CBHB remains one of the key beneficiaries of this trend.
Earnings revision. Following this contract win, which exceeded our order book replenishment assumption, we have raised our FY25 order book replenishment to RM602m from RM560m. We maintain our order book replenishment assumptions for FY26F and FY27F, as resources are expected to remain focused on executing existing orders. As a result, we have revised our earnings forecasts upwards by 6.6% for FY26F and 2.2% for FY27F, with no impact to FY25F given the late-Dec commencement of the contract.
Valuation & Recommendation. Post earnings adjustments, we upgrade the stock to BUY rating (from HOLD) and raise our TP to RM0.50 (from RM0.47), based on 18x FY26F EPS of 2.8 sen. Following the recent share price weakness and improving earnings outlook, we believe CBHB’s risk-reward profile has turned favourable. We like 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 data centre operators, and (iii) robust supplier relationships that support cost-efficient procurement.
Risks. High exposure to the DC sector, inability to secure new contracts, and unexpected project delays.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
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| EUR | 4.771456 | 4.778746 |
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