PETALING JAYA: Powerwell Holdings Bhd
is entering a stronger earnings cycle as Malaysia’s data centre (DC) build-out, renewable energy rollout and infrastructure spending gather pace.
“Powerwell is perfectly positioned to capitalise on the strong demand outlook for the electrical power distribution segment, which is structurally backed by the multi-year DC boom unfolding in Malaysia,” Affin Hwang Investment Bank Research (Affin Hwang IB) said.
It has initiated coverage on the stock with a “buy” call and a target price of 80 sen, as the electrical switchboard maker boasts a positive earnings growth trajectory while continuing to trade at an attractive valuation of a forecast 13 times price-to-earnings ratio in 2027.
It expected the group’s core earnings to grow at a 21% compound annual growth rate between financial year 2025 (FY25) and FY28, driven by higher revenue, stable margins and newly expanded capacity.
Its investment case rests heavily on Powerwell’s position in electrical power distribution, specifically low-voltage and medium-voltage switchboards and switchgear, which is a niche increasingly tied to mission-critical projects.
Affin Hwang IB said Powerwell is perfectly positioned to ride the DC and renewable energy megatrends, citing the company’s long operating track record, international certifications and strategic manufacturing relationship with Siemens AG.
It noted that the entry of new strategic shareholders in 2024, after founders reduced their stakes, has accelerated corporate transformation.
Management is now executing what Affin Hwang IB describes as a five-pillar growth strategy, centring on capacity expansion, process automation, product upgrades, mergers and acquisitions, and market expansion.
A key immediate catalyst is manufacturing expansion.
Powerwell has rented an additional factory in Kota Kemuning, lifting total production space to 143,000 sq ft, with annual output expected to rise to 12,000 cubicles.
At the same time, it is testing an artificial intelligence- or AI-driven configuration system aimed at shortening engineering design time by 30%, while modular designs are expected to improve assembly efficiency.
The strongest earnings driver, however, remains DCs.
As of February 2026, 66% of Powerwell’s RM395mil tender book came from DC-related jobs, while another 18% came from renewable energy projects.
DCs already make up 35% of the group’s current order book, excluding a fresh RM68.5mil DC contract secured in January.
Affin Hwang IB believes this positioning matters because demand in the premium switchboard segment increasingly favours certified, proven suppliers.
Powerwell’s recent purchase of Tenaga Kenari expands its reach into Sabah and Sarawak, while Firerex adds fire-suppression capability and opens cross-selling opportunities.
Financially, Affin Hwang IB expects revenue to rise from RM165mil in FY26 to RM254.9mil by FY28, with core earnings climbing to RM31.7mil.
Gross margins are projected to remain within the upper historical band of 25% to 30%, supported by pricing discipline and better operational efficiency.
The research house also favours Powerwell for its strong cash generation, while its free cash flow remains strong, ranging from RM17mil to RM23mil annually over FY27 to FY28.
“This stellar cash generation provides ample headroom for continued reinvestment or potential dividend distributions to shareholders,” it said.
