PETALING JAYA: Mestron Holdings Bhd
’s core earnings are set to hit new highs for the financial year 2022 (FY22) till FY25, backed by a compounded annual growth rate of 32%, says RHB Research.
The research firm premised this on the expansion of the renewable energy (RE) segment of Mestron, new order wins for conventional and specialty poles and the recovery in the construction sector, which portends stronger orders from both public and private sector.
The lighting pole manufacturer’s RE segment is expected to provide a new earnings leg up as the company has secured a 21-year power purchase agreement with Tenaga Nasional Bhd for its new 2MW biogas plant.
“This should contribute RM6mil and RM2mil to RM3mil in incremental revenue and profit after tax, respectively, under full capacity,” noted RHB Research.
Mestron is also involved in the Net Energy Metering and Self-Consumption schemes with 3.3MW in rated capacity capable of generating RM1.8mil annually in recurring revenue from FY24, the research house said in a report.
RHB Research does not rule out Mestron securing further engineering, procurement, construction and commissioning jobs in the interim, given the current tender book of about RM100mil.
Mestron has successfully delivered about 200 towers under phase one of the National Digital Infrastructure Plan programme.
“We believe the group is well positioned to capture additional site orders under phase two, with the government targeting 100% Internet coverage by 2025.
“The ongoing 5G deployment is an added bonus,” said RHB Research.
The improved demand for lighting poles is premised on the revival of construction activities, renewed interest in the property sector as well as government-led catalytic developments.
It has set a target price of 80 sen per share on Mestron.
