PETALING JAYA: HE Group Bhd
can expect a softer sequential fourth quarter 2025 (4Q25) earnings as newly secured projects are still in the early execution stages, with ramp-up in progress billings expected in the first half of 2026.
Phillip Capital Research trimmed its revenue forecast on the back of slower order book replenishment. But it maintained its 2025 earnings estimates given the better-than-expected margins.
The group’s outstanding order book has risen to RM74mil after securing the latest electrical work package for a data centre in Cyberjaya.
Phillip Capital Research said the potential contract-win newsflow in 4Q25 could act as a catalyst for a share price re-rating.
It retained its target price of 51 sen a share for the stock pegged at 14 times price-to-earnings ratio multiple on 2026 earnings per share.
It maintained its “buy” call on the stock.
It said the group is trading at an undemanding valuation of 10 times 2026 price-to-earnings ratio, supported by a solid balance sheet with net cash making up 34% of market cap.
According to the research house, key risks to its call include slower-than-expected order book replenishment, unforeseen project delays, and cost overruns.
The group’s nine-month 2025 core net profit came in at RM9.4mil, which was within its, but above consensus expectations.
Revenue declined 45% year-on-year to RM96mil, weighed down by weaker power distribution and electrical equipment hook-up and retrofitting services segments, but partly mitigated by stronger other building systems works.
Although revenue came in below its earlier forecasts, the stronger-than-expected margins helped offset the shortfall.
Overall, the results came in at 79% of its and 82% of consensus full-year estimates, which it deems to be within its expectations on weaker 4Q25 earnings ahead.
