· CBHB’s 2QFY26 CNP came in at RM24.5m (+34.8% QoQ, +146.8% YoY), bringing 1HFY26 CNP to RM42.6m, above expectations at 59% of our full-year forecast and 53% of consensus estimates, mainly driven by stronger-than-expected progress recognition from ongoing projects that achieved key construction milestones during the quarter.
· CBHB’s near-to-medium term outlook remains supported by its sizeable RM744m outstanding order book and RM1.3bn tender book, alongside growing exposure to data centre and power infrastructure opportunities, including renewable energy-related projects such as BESS.
· Supported by the strong performance of the group’s M&E Systems segment, we maintain our FY26F, FY27F and FY28F CNP forecasts of RM72.1m, RM77.8m and RM85.8m respectively.
· Maintain BUY with a higher TP of RM0.95, based on 23.1x FY27F EPS of 4.1 sen, reflecting our higher P/E multiple in line with the peers’ average forward P/E.
Above our expectation. CBHB’s 2QFY26 core net profit came in at RM24.5m (+34.8% QoQ, +146.8% YoY), bringing 1HFY26 CNP to RM42.6m. This represents 59% of our full-year forecast and 53% of consensus estimates, running ahead of our expectations at the halfway mark, mainly driven by stronger progress recognition from ongoing projects that achieved key construction milestones during the quarter.
QoQ. 2QFY26 CNP rose 34.8% to RM24.5m (vs RM18.2m in 1QFY26), on a 35.1% increase in revenue to RM120.9m as ongoing projects progressed into higher-value work stages. Gross profit margin held broadly steady at 30.1% in 2QFY26 (vs 30.6% in 1QFY26), as newly secured projects began contributing more meaningfully to progress recognition.
YoY. CBHB’s CNP jumped 146.8% to RM24.5m (vs RM9.9m in 2QFY25), underpinned by a strong 102.6% increase in revenue to RM120.9m. The stronger performance was mainly attributable to higher progress recognition as several ongoing projects achieved key construction milestones during the quarter. Consequently, EBITDA and PBT rose 143.3% and 134.2% YoY to RM32.2m and RM32.5m respectively. Gross profit increased 123.0% YoY to RM36.5m (vs RM16.3m in 2QFY25).
YTD. 1HFY26 CNP surged 172.1% YoY to RM42.6m (vs RM15.7m in 1HFY25), underpinned by a 119.0% increase in revenue to RM210.5m as several ongoing projects achieved key construction milestones. Gross profit rose 135.6% YoY to RM63.9m, lifting gross profit margin to 30.3% (from 28.2%), while EBITDA and PBT climbed 170.5% and 165.3% YoY to RM55.8m and RM56.8m respectively.
Outlook. CBHB’s near-term earnings visibility is anchored by its latest RM246.0m contract win, secured directly from the asset owner rather than on a subcontract basis, for the supply, installation, testing and commissioning of high-voltage transformers and related equipment for a 275kV substation supporting a data centre in Johor. The contract will run from 3 July 2026 to 15 September 2028, providing earnings visibility over the next two years. While the customer was not named, it was described as a Malaysian private company involved in data centre, telecommunications, IT and AI GPU services, reinforcing CBHB’s exposure to the growing data centre infrastructure ecosystem. Assuming a 12% net margin, in line with the group’s historical data centre-related M&E projects, we estimate the contract could contribute approximately RM29.5m in net profit over its tenure. Including this win, CBHB’s total outstanding order book rises to RM744.0mn, translating into a strong 3.4x cover of FY25 revenue, while year-to-date contract wins of c.RM330.0m keep the group on track to meet its c.RM600.0m annual replenishment target.
Tender pipeline. The tender book remains healthy at RM1.3bn, with c.80% comprising DC-related projects and c.20% non-DC tenders, spread fairly evenly between new and existing clients. Management expects the data centre upcycle to remain firm over the next one to two years, with larger developments likely to be rolled out in phases. Beyond data centres, the group is pursuing substation packages at solar plants and is targeting semiconductor-related facilities in Johor, though these remain at an early tendering stage. It continues to monitor Tenaga Nasional Berhad (TNB) opportunities but is keeping its focus on private-sector work, having yet to build a sizeable TNB track record. We expect earnings momentum to strengthen in 2HFY26, driven by progressive milestone recognition, with a sizeable portion of the order book scheduled for completion in FY26. Management remains cautiously optimistic, supported by favourable demand for power distribution systems and ongoing opportunities across DC and non-DC projects.
Margins. The stronger margins recorded over the past two quarters were largely underpinned by a higher mix of private-sector jobs. Management guides for net margins to normalise towards 12-15% over the next two quarters as the project mix rebalances, and for group earnings growth of 10-20% in the coming year.
Competition and sourcing. While new entrants are emerging in the broader data centre tender space, management notes that competition for high-voltage substation packages specifically remains limited, with most newcomers drawing on high-voltage experience from solar plants and heavy industries. Transformer procurement is also not seen as a bottleneck, with the key consideration being vendors’ ability to meet client specifications, with lead times of c.5-8 months for China-brand equipment and up to 12 months for non-China brands.
Earnings revision. We make no changes to our earnings forecasts. Our FY26F, FY27F and FY28F CNP forecasts are maintained at RM72.1m, RM77.8m and RM85.8m respectively.
Valuation & Recommendation. We maintain our BUY call with a higher TP of RM0.95 (from RM0.67 previously), based on an updated P/E multiple of 23.1x and FY27F EPS of 4.1 sen. We raise our valuation multiple to the peers’ average forward P/E of 23.1x, as we believe CBHB’s strengthened order book, improving earnings visibility and growing exposure to data centre and power infrastructure projects warrant a valuation closer to its peers. The latest contract win further reinforces its growth prospects, while the healthy tender pipeline provides scope for continued order book replenishment.
Risks. Key risks include weaker-than-expected order book replenishment, project execution delays and margin compression arising from cost overruns or unfavourable project mix.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.065852 | 4.097386 |
| EUR | 4.589381 | 4.597416 |
| CNY | 0.610175 | 0.610647 |
| HKD | 0.518032 | 0.522054 |
| SGD | 3.177971 | 3.202709 |