PETALING JAYA: HE Group Bhd
is expected to achieve better order book clarity in the second half of 2025 (2H25), as several contracts are anticipated to be finalised during the period.
According to Phillip Capital Research, the electrical engineering service provider has secured RM15mil in contract wins so far this year, falling short of its RM200mil target for 2025
Due to delays in contract rollout, the research house revised its order replenishment assumptions downward to RM200mil, RM250mil and RM300mil for 2025, 2026 and 2027, respectively.
As a result, earnings forecasts have been lowered by 15% to 35%, prompting a reduction in the company’s 12-month target price from 84 sen to 44 sen.
Nonetheless, it was noted that HE Group would continue focusing on expanding its presence in the data centre segment, which now constitutes 70% of its RM780mil tender book.
This marked a shift from the previous year when semiconductor-related projects made up 80% of its pipeline
Phillip Capital attributed this to key clients postponing their expansion plans amid prolonged market downturn and slower demand across various end markets.
The group’s outstanding order book of RM97.6mil as of December 2024, which predominantly came from the semiconductor sector, is expected to be fully recognised in 2025, said the research house.
“Overall, we project the upcoming first quarter of 2025 (1Q25) net profit to be relatively flat compared with the 4Q24 level at RM3mil profit after tax,” it added.
Additionally, Phillip Capital noted that HE Group aimed to complete its Investment, Trade and Investment Ministry special issue via an offer for sale by existing shareholders by May. This is expected to alleviate investor concerns about potential share overhang.
While the research firm has revised its earnings and target price downward due to weaker order visibility, it has maintained a “buy” recommendation on HE Group, citing potential improvements in order clarity and contract finalisation in 2H25.
