PETALING JAYA: Execution of projects clinched this year by CBH Engineering Holding Bhd will drive its earnings going forward, after a rather disappointing nine-month performance for financial year 2025 (9M25).
The electrical engineering service provider’s revenue declined 32% year-on-year (y-o-y) for 9M25 ended Sept 30 due to a slower order book burn rate, while core earnings fell 38.6% to RM21.6mil. The earnings were only at 53% of consensus forecast.
On a quarter-on-quarter (q-o-q) basis, core earnings slipped 42.3% in tandem with the weaker revenue by 47.2%. It could have been worse if not for core net margins improving by some 150 basis points from 16.7% to 18.3%, thanks to a significantly lower effective tax rate.
TA Research expects CBH to close out FY25 on the weak side but improve in FY26 onwards. With projects secured by CBH prior to FY25 already at the tail end of their delivery cycle, and most of the new wins only secured in the second half of FY25 and still at the initial mobilisation stage, the research house revised down its FY25 order book burn rate for the company to reflect the slower pace of execution.
“Conversely, we have raised our FY26 to FY27 burn rate assumptions in anticipation of a steeper ramp-up, consistent with the natural S-curve of project execution, where construction intensity typically accelerates in the mid-to-late phases.
“As a result, our core earnings forecast has been cut by 13% for FY25 but revised higher by 1.3% for FY26 and 6.4% for FY27,” it noted in a report following the results announcement by CBH.
CBH has an outstanding order book of RM530.5mil (of which RM471.6mil was secured year-to-date), which translates into a healthy 2.3 times cover of TA Research’s FY25 revenue forecast for CBH.
The order book provides CBH with earnings visibility for the next three years, particularly the rapid build-out of the data centre ecosystem in the country.
TA Research maintained its “buy” call on CBH with an unchanged TP of 58 sen a share, premised on a targeted price-earnings multiple of 19 times 2026 EPS.
“We continue to like the stock for its strong footfall in the robust data centre power infrastructure construction space and scalable integrated mechanical and electrical capabilities that position it to capitalise on sustained investment momentum.”
