PETALING JAYA: Apex Securities has maintained its “buy” call on Cheeding Holdings Bhd
following the group’s announcement yesterday that it secured a RM13.5mil contract from Tenaga Nasional Bhd (TNB) for works at the PMU 132/11kV Genting Sempah substation.
Cheeding, however, fell 0.5 sen to 83 sen with 696,900 shares done at 9.58 am.
“We view the contract positively, as it supports earnings growth through FY28. Assuming a gross profit (GP) margin of 30% and after stripping out SST, the project is expected to deliver RM3.8mil in gross profit over its duration, based on the assumption that works commence immediately upon letter of acceptance issuance,” it said in a note today.
This implies contributions of RM0.2mil in FY26F, representing 0.3% of its FY26F forecast, RM2.1mil in FY27F, accounting for 3.3% of the FY27F forecast, and RM1.5mil in FY28F, or 2.0% of the FY28F forecast.
The research house said the award lifts Cheeding’s unbilled order book to RM231.7mil, or 2.0 times its forecast FY25 revenue, strengthening the group’s medium-term earnings visibility.
The contract, secured via a 60:40 unincorporated joint venture between Pembinaan Bukit Cheeding Sdn Bhd and Orasko Sdn Bhd, covers dismantling of existing 132kV primary equipment, installation and commissioning of new systems and steel structures, secondary system completion and civil modifications.
Apex Securities expects earnings contribution to be spread across FY26F to FY28F, with the largest share recognised in FY27F.
It made no changes to its earnings forecasts as the contract win is within its replenishment assumptions.
Apex Securities has maintained its target price of 96 sen, based on 20 times FY27F EPS of 4.8 sen.
