CBH Engineering expected to rise on DC demand

PETALING JAYA: CBH Engineering Holding Bhd’s (CBHB) year-to-date (y-t-d) new job wins have increased to a record high of RM601.6mil for the financial year 2025 (FY25), following its recent RM130mil contract secured for a data centre (DC) substation in Johor.

In a report, TA Research said this award will lift the group’s outstanding order book to approximately RM681.2mil, translating into a strong 2.9 times cover of its FY25 revenue forecast and supporting near-term earnings visibility.

“Assuming a net margin of 15%, we estimate the contract to contribute about RM19.5mil to earnings over its execution period,” it added.

Looking ahead, as FY25 draws to a close, the research house also believes that CBHB is poised to sustain its new order book replenishment momentum continuing into the next financial year, supported by a robust tender book of around RM600mil.

TA Research said the group’s tender pipeline continues to be driven by resilient demand for power infrastructure works.

“We take the opportunity to raise our FY25 new job win assumption to RM601.6mil (from RM500mil previously), reflecting the stronger-than-expected job replenishment achieved y-t-d and our view that no further major job wins are expected as the financial year draws to a close,” it added.

Concurrently, the research house has fine-tuned its FY25 to FY27 order book burn rate assumption to reflect higher backlog, given that most sizeable job wins were secured toward the tail-end of 2025.

Consequently, FY25 earnings forecast is marginally reduced by 0.2%, while FY26 and FY27 earnings are adjusted upward by 4.6% and 4.7% respectively, said TA Research.

Following the earnings revisions, it has raised CBHB’s target price to 61 sen from 58 sen and reiterated a “buy” call on the stock.

The research house said: “We continue to like CBHB for its strong foothold in the DC power infrastructure construction space and scalable, integrated mechanical and electrical capabilities, which position the group well to capitalise on sustained infrastructure investment momentum.

Meanwhile, Apex Securities said it viewed the award positively, as it represents a new customer win, further strengthening CBHB’s positioning in the DC space and is expected to support earnings growth through FY27.

Assuming Phases 2 and 3 commence following the completion of Phase 1, a 20% gross profit margin, and after stripping out sales and service tax, the contract is estimated to generate around RM24.5mil in gross profit over the 11-month duration.

The bulk of earnings is expected to be recognised in FY26, with tail-end contributions extending into FY27.

Following this award, Apex Securities said CBHB’s outstanding order book is estimated at RM662.3mil (2.4 times FY24 revenue), supporting medium-term earnings visibility

Following this contract win, which exceeded its order book replenishment assumption, Apex Securities has also raised the group’s FY25 order book replenishment to RM602mil from RM560mil.