MNHLDG: Power Infrastructure Firm Poised for Continued Growth Amid Robust Pipeline

PhillipCapital has reiterated its “BUY” recommendation for the power infrastructure firm, raising its target price to RM2.20 from RM1.82, citing a robust project pipeline and accelerated progress on key contracts. The revised target price reflects a 20.2% upside from the last traded price of RM1.83.

Performance Review and Key Drivers

The investment bank highlighted that the company’s project pipeline with a key data centre (DC) client remains strong, supported by ongoing construction at Kempas Tech Park (KTP) and Nusajaya Tech Park (NTP). Three DC blocks have already been completed, with a fourth targeted for 1HCY26. These blocks are backed by two reputable tech giants, indicating significant demand for DC infrastructure.

Additionally, the firm is undertaking a RM39.6m substation expansion project for Customer A, expected to finish by December 2025, which is designed to support up to five DC blocks. Early infrastructure work for three further DC blocks suggests potential future requirements, including a new 275kV substation valued at RM130-150m, planned for 2026.

Earnings momentum for 1HFY26 is expected to be propelled by the completion of these three DC projects and an acceleration of works across various TNB projects. PhillipCapital has revised its FY26-28E earnings forecasts higher by 6-10%, attributing this to faster TNB project execution and an improved margin profile driven by a higher mix of DC project revenue. DC power infrastructure projects typically command gross profit margins of 20-25%, exceeding the 15-18% margins seen in TNB projects due to quicker project turnarounds.

Future Outlook and Strategic Position

The company’s outstanding order book of RM1.1bn is anticipated to sustain earnings momentum into 1HFY26, bolstered by the completion of two substation expansion projects for Customer A (RM92m) and a substation EPCC project for Customer E (RM180m), alongside ongoing progress on multiple TNB initiatives.

Its replenishment outlook remains healthy, underpinned by a RM777m tender book, with DC projects accounting for 44%, solar for 24%, and TNB jobs for 14%. With new tenders in the pipeline for both DC and TNB segments, the tender book is expected to return to its historical RM1-1.2bn level by end-FY26E, ensuring continued growth. The group’s recent private placement exercise, which raised RM101m in gross proceeds, further strengthens its financial capacity to capitalize on new project opportunities.

Analyst View and Risks

PhillipCapital’s decision to maintain its “BUY” rating and raise the target price reflects the company’s superior Return on Equity (ROE) of 27% (compared to peers’ average of 22%) and its strong position to capture structural growth in the power infrastructure segment, particularly in the fast-growing DC and solar sectors. The rising wave of investment in these sectors is expected to drive industry-wide re-rating, benefiting players through stronger earnings traction, deeper order book visibility, and an expanding addressable market.

Key risks to the “BUY” call include slower-than-expected project rollouts affecting order book replenishment and unforeseen delays.