CBH Engineering Holding Berhad - Another DC Contract Secured, Sixth Win of FY26
Tue, 08-Sep-2026 07:46 am
by Research Team • Apex Research

Counter

CBHB (0339)

Target Price (RM)

1.05

Recommendation

Buy

  • CBHB, via its wholly owned subsidiary CBH Engineering Sdn Bhd has secured a RM88.1m contract for the design and build of a 275kV consumer landing station serving a data centre in Selangor. The award lifts its outstanding order book to RM1.16b, equivalent to 5.3x FY25 revenue.

  • Assuming a gross profit margin of 23.5%, the project is expected to generate c.RM20.7m in gross profit over nine months, with c.RM10.7m recognised in FY26F and c.RM10.0m in FY27F.

  • No change to our earnings forecasts as the contract win is within our order book replenishment assumptions.

  • Maintain BUY with updated TP of RM1.05, based on Peer P/E Average of 23.1x and carry forward FY28F EPS of 4.6 sen, supported by a three-star ESG rating.

 

RM88.1m Contract. CBHB has secured a RM88.1m contract from a Malaysian company for the design and build of a 275kV consumer landing station (CLS) for a data centre in Selangor. The scope covers detailed design, supply, delivery, installation, testing and commissioning. Works commenced on 13 August 2026 and are scheduled for completion by 12 May 2027, implying a nine-month delivery period. The customer is principally engaged in providing infrastructure for hosting and data processing services, with its identity withheld under a non-disclosure agreement.

 

Our View.We view the award positively, as it should support CBHB's earnings growth through FY27F. This marks the sixth contract secured in FY26, bringing total YTD wins to RM477.2m. Assuming a 23.5% gross profit margin, the contract is expected to generate c.RM20.7m in gross profit over the nine-month duration, with c.RM10.7m recognised in FY26F and c.RM10.0m in FY27F. Following this award, CBHB's outstanding order book stands at an estimated RM1.16b (5.3x FY25 revenue), strengthening its medium-term earnings visibility. Execution risk appears manageable given CBHB's track record in HV substation works.

 

Outlook. We expect DC-related job momentum to remain strong, supported by continued hyperscaler investment in data centre and AI infrastructure. CBHB's substation tender book stands at c.RM1.0bn for FY26, and at our assumed win rate of c.60%, this underpins our RM600m replenishment assumption. With six contracts secured YTD and a proven record in delivering HV substations for DC clients, we believe CBHB remains a key beneficiary in this segment. CBHB remains in a net cash position throughout our forecast period, with net cash of RM157.8m in FY25A and RM109.8m forecast for FY26F, sufficient to fund working capital on the enlarged order book without new borrowings.

 

Earnings revision. No change to our earnings forecasts as the contract win is within our order book replenishment assumption of RM600m. However, given YTD order wins have reached 80% of our assumption, and with four months left in the year, should the contracts continue at its current pace, we see scope for an upward revision to our FY26F and FY27F replenishment assumptions and earnings forecasts.

 

Valuation & Recommendation. We maintain BUY and upgrade our TP to RM1.05, based on Peer average of 23.1x FY27F EPS of 4.6 sen. We continue to like CBHB for its (i) strategic role as a proxy for Malaysia's rising power demand, (ii) established track record in delivering HV substations tailored for DC operators, and (iii) robust supplier relationships that enable cost-efficient procurement.

 

Risks. Delays in data centre project rollouts, execution and manpower constraints on the enlarged order book, cost overruns on fixed-price contracts, and customer concentration in the data centre segment.

Read more details in:

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.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.031014 4.063294
EUR 4.698022 4.707461
CNY 0.602841 0.603463
HKD 0.514130 0.518261
SGD 3.183847 3.209522