PETALING JAYA: HE Group Bhd
’s latest contract win could earn it RM8mil in profit after tax and minority interest over the duration of the contract.
With this win, its estimated outstanding order book stands at RM150mil, providing earnings visibility until end-2027, said Phillip Research.
The research house said HE Group’s tender book stands at RM1bil, predominantly driven by data centre (DC)-related projects, which account for 95% of the total.
The group is awaiting the outcome of two electrical DC tenders in Johor worth a cumulative RM160mil, including an expansion works package for an existing operator and a new greenfield project by a new DC operator.
HE Group said its wholly-owned subsidiary, Hexatech Engineering Sdn Bhd, accepted a letter of award worth RM86mil for the construction of a 132kV/33kV new substation project in Selangor.
The contract is scheduled to commence in May 2026 and is expected to be completed by October 2027.
Phillip Research kept its earnings forecast for HE Group unchanged, as this contract falls within the group’s order book replenishment assumption.
The research house reiterates its “buy” rating on HE Group with a higher 12-month target price of 57 sen a share after rolling forward its valuation horizon, pegged to an unchanged target 14 times price-to-earnings ratio (PER) multiple on 2027 earnings per share.
Phillip Research views the current valuation at nine times 2027 PER as undemanding, given the group’s solid track record in semiconductor projects, alongside growing exposure to the DC sector and successful penetration of the port infrastructure sector.
The key risks to its “buy” call include slower-than-expected order book replenishment, unforeseen project delays, and pressure on project margins due to cost.
