PETALING JAYA: Utilities engineering firm UUE Holdings Bhd
, which recently clinched a RM16mil project to undertake electrical systems works for a factory in Johor, faces headwinds from rising costs due to volatile geopolitics.
RHB Research has maintained its “buy” call and lowered the stock’s target price to 55 sen from 64 sen, as it trimmed the company’s earnings estimates to factor in potential costs arising from geopolitical stresses.
The research house said the project “is strategically significant as it signals UUE’s ability to move up the value chain”.
However, it noted the company faces cost pressures from the West Asia conflict, which is driving raw material price volatility and rising energy costs.
“The manufacturing cost of high-density polyethylene (HDPE) pipes is sensitive to fluctuations in HDPE resin prices, but UUE maintains a three-to-six-month inventory buffer and intends to pass cost increases to clients,” the research house added.
While fuel represents a relatively small portion of its cost of goods sold, RHB Research believes there could be indirect pressure arising from higher sub-contracting rates – especially in Singapore, where the company maintains projects.
While there would be no change to earnings estimates for the financial year ended Feb 28, 2026 (FY26), RHB Research has trimmed its forecasts by 14% for both FY27 and FY28.
The research house also revised the order book replenishment value to RM320mil from RM350mil.
