PETALING JAYA: Kawan Renergy Bhd
’s prospects look positive, with the group’s latest results exceeding expectations, analysts say.
The engineering services firm posted a core net profit of RM6.4mil for the fourth quarter of its financial year ending Oct 31 (4Q25), bringing full-year core net profit to RM24.3mil following stronger-than-expected revenue recognition.
Apex Research said in a note to clients: “We raised our order book replenishment assumption for Kawan Renergy slightly to RM160mil from RM155mil, with the bulk of revenue now expected to be recognised in its current financial year (FY26).”
The research house also maintained Kawan Renergy’s order book replenishment assumptions for FY26 to FY27, while revising its order book execution assumptions to reflect earlier project execution, with more revenue recognised in FY26 and a smaller portion spilling into FY27.
“As a result, our earnings forecasts for the group have been revised by 4% and minus 3.1% for FY26 and FY27, respectively,” Apex Research noted.
On the group’s outlook, the research house said it expects earnings to likely remain soft in 1Q26 due to the monsoon season and festive holidays, which typically slow engineering activity.
Near-term order book replenishment is expected to pick up from 2Q26 onwards as seasonal disruptions ease, it added.
Apex Research said it is positive about the company’s outlook, particularly as the recent 16.7% increase in gas facility base tariffs should support higher interest in co-generation solutions as an alternative power source.
To cater to a diversified customer base, Kawan Renergy spent RM7.4mil in capital expenditure during the quarter to upgrade its research and development capabilities and equipment, mainly to support industrial and environmental solutions.
After its earnings revisions, Apex Research has maintained a “buy” call on the stock with a slightly higher target price of RM1.05 from RM1.02 previously.
It noted the group’s outlook is supported by up to 60% in-house component fabrication, which enhances cost control and project execution, as well as distribution status for Rolls-Royce generation sets and solar turbines, providing exposure to the accelerating data centre investment cycle and growing mission-critical power opportunities.
Risks for the group include rising prices for steel and metal plate and slower-than-expected order book replenishment.
