MNHLDG: Robust Earnings Driven by Strong Margins and DC-Substation Growth, Target Price Increased
| Key Information | Details |
|---|---|
| Investment Bank | PHILLIPCAPITAL |
| TP (Target Price) | RM2.37 (+41.9%) |
| Last Traded | RM1.67 |
| Recommendation |
A recent research report by PhillipCapital indicates that strong financial performance, driven by robust margins, has led to a significant upgrade in outlook and valuation. The investment bank has reiterated its “BUY” recommendation for the company, raising its target price following a period of record earnings.
Performance Review
The company delivered exceptional results for the first half of fiscal year 2026 (6MFY26), with core net profit soaring to RM53.5 million, marking a 121% year-on-year increase. Revenue for the period doubled to RM457.6 million. These figures surpassed both PhillipCapital’s previous forecasts (72% achieved) and consensus estimates (76% achieved), primarily due to better-than-expected margins. The substation engineering segment was a key driver, contributing a 42% revenue uplift, though partially offset by a 21% decline in the underground utilities segment. The EBITDA margin improved by 0.5 percentage points year-on-year to 15.3%, benefiting from a higher revenue mix from high-margin direct current (DC) contracts.
Margin Outlook and Challenges
On a sequential basis, second-quarter (2QFY26) revenue grew 14% quarter-on-quarter to RM243.5 million, propelled by strong progress recognition from ongoing DC projects. However, the EBITDA margin for the quarter softened slightly by 0.4 percentage points quarter-on-quarter to 15.1%, largely attributed to higher costs incurred during the initial phases of project execution. Looking ahead, while revenue recognition is expected to remain strong into the second half of FY26, net margins are anticipated to normalise towards approximately 9% as operating costs are backloaded.
Future Prospects and Investment Rating
PhillipCapital has revised its earnings per share (EPS) forecasts for FY26-27E upwards by 4-12% to reflect stronger project margins. Consequently, the investment bank has maintained its “BUY” rating and raised the target price to RM2.37, up from RM2.20 previously. The positive outlook is underpinned by the company’s structural growth in the power infrastructure segment, coupled with strategic exposure to the rapidly expanding DC and solar sectors. Key risks identified that could impact this positive trajectory include slower-than-expected project rollouts affecting order book replenishment and unforeseen operational delays.
