Cheeding Holdings Berhad - Earnings Beat Despite Softer Revenue
Thu, 28-May-2026 12:17 pm
by Research Team • Apex Research

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CHEEDING (0372)

Target Price (RM)

0.96

Recommendation

Buy

  • CHEEDING’s 4QFY26 CNP came in at RM10m (-6.4% QoQ), bringing 12MFY26 CNP to RM36.3m, above expectations at 109% of both our and consensus estimates, supported by stronger margins and lower administrative expenses despite weaker contribution from overhead infrastructure EPCC projects.

  • CHEEDING’s FY27 outlook continues to be supported by its RM164.6m outstanding orderbook and RM303m tender book. 

  • We maintain our earnings projections for FY27F–FY28F without further revisions, as results remain within our upgraded estimates.

  • Maintain BUY with an unchanged TP of RM0.96, based on 20x FY27F EPS of 4.8 sen.

Above expectations. After adjusting for EIs (+RM0.2m), CHEEDING’s 4QFY26 core net profit (CNP) came in at RM10m (-6.4% QoQ), bringing 12MFY26 CNP to RM36.3m. The results were above expectation, accounting for 109% of both our and consensus estimates, supported by stronger margins and lower administrative expenses despite weaker contribution from EPCC of overhead infrastructure for utilities projects.

 

QoQ. 4QFY26 CNP decline6.4% as revenue decrease 30.2% to RM28.9m, mainly attributable to lower progress billings from overhead infrastructure EPCC projects. Meanwhile, administrative expenses declined sharply by 51.8% QoQ to RM3.3m, partly due to lower listing-related expenses. Effective tax rate also eased to 22.6% from 30.9% in the preceding quarter. Consequently, CNP margin expanded to 34.6%, representing an 8.8 percentage-point improvement QoQ. 

 

YoY. Not applicable, as CHEEDING was newly listed with no corresponding period for comparison.

 

Outlook. We remain positive on CHEEDING’s FY27 outlook, supported by a healthy outstanding orderbook of RM164.6m, equivalent to 1.5x FY26 revenue. The orderbook remains well diversified across overhead infrastructure (64.1%), substation engineering (20.6%), underground utilities (14.4%) and maintenance works (0.9%). In addition, the Group’s tender book has expanded to RM303m, which should support orderbook replenishment moving forward. Going forward, management intends to expand its presence in underground utilities and substation engineering services, while strengthening its internal engineering capabilities via the establishment of an in-house Design Department. Coupled with its stronger balance sheet post-listing, we believe CHEEDING is better positioned to secure larger-scale utilities infrastructure projects moving forward.

 

Earnings revision. No changes to our earnings forecasts at this juncture. We maintain our FY27F and FY28F net profit projections as results are tracking within our upgraded estimates.

 

Valuation & Recommendation. We maintain our BUY call and our unchanged TP of RM0.96. Our valuation remains pegged on a 20x FY27F EPS of 4.8sen. We continue to remain constructive on CHEEDING’s outlook, given its: (i) established track record in utilities infrastructure EPCC works, (ii) expansion into higher-value underground utilities and substation engineering services, (iii) stronger execution and tendering capabilities post-listing, and (iv) direct exposure to Malaysia’s ongoing grid modernisation and rising power infrastructure requirements.

 

Risks. Delay in project rollouts, customer concentration risk, and cost overrun risk.

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