UUE builds new growth drivers

Ting: The group’s expansion into subsea HDD is aligned with rising demand for fibre optic and submarine cable connectivity.

UUE Holdings Bhd is broadening its growth drivers, with Singapore, digital infrastructure and renewable energy (RE) emerging as drivers of its next phase of expansion.

The Johor-based group has built its core business around power infrastructure engineering and construction, much of which has historically been linked to projects for Tenaga Nasional Bhd (TNB), as well as the manufacturing of high-density polyethylene (HDPE) pipes for utility networks.

It has also expanded into subsea horizontal directional drilling (HDD), which is gaining traction, and last year ventured into solar engineering, procurement, construction and commissioning (EPCC) services via unit Enerxite Sdn Bhd.

Managing director and major shareholder Datuk Ting Kok Hwa says the group is steadily reshaping its order book as part of its diversification strategy.

Before UUE’s 2024 initial public offering, about 80% of its order book was linked to TNB-related projects.

Today, that share has fallen to about half of its RM536.4mil outstanding order book, while around 30% comes from Singapore’s SP Power Ltd.

The remainder is derived from private-sector projects, including industrial facilities, property developments, data centres and newly secured subsea HDD works.

“While tender awards are ultimately beyond the group’s control, the shift reflects progress in our diversification strategy.

“TNB will remain an important and strategic end client, but our objective is to progressively increase contributions from other growth sectors and geographies,” Ting tells StarBiz 7.

Looking ahead, he says the financial year ending Feb 28, 2027 (FY27) is shaping up broadly in line with management’s expectations, supported by a RM536.4mil order book that provides earnings visibility of up to 36 months.

“We continue to target double-digit growth in both revenue and earnings, underpinned by a healthy tender pipeline and steady project execution.

“In FY26, we delivered a record-high revenue of RM209mil, representing a robust five-year compound annual growth rate of 32.2%.”

Ting says the growth will be supported by several structural trends, including continued investments in power grid modernisation across Malaysia and Singapore, rising demand from RE infrastructure and data centres; as well as opportunities in subsea horizontal HDD.

Singapore is becoming an increasingly important growth market for UUE.

Although the city-state accounted for 11.8% of FY26 revenue, it now makes up around 30% of the group’s outstanding order book, with projects generally commanding better margins due to their higher technical requirements and stricter standards, according to Ting.

He says the group’s expansion into subsea HDD is aligned with rising demand for fibre optic and submarine cable connectivity, particularly as Singapore expands its digital infrastructure and Johor continues to attract data centre investments.

“Our track record with utility clients such as TNB and SP Power gives us experience in delivering power infrastructure projects.

“For example, through our projects with SP Power, we have undertaken high-voltage projects of up to 400 kV, which is relevant to the power requirements of data centres.”

However, Ting notes that data centre-related projects currently account for less than 5% of the group’s outstanding order book.

By segment, underground utilities engineering remains the largest revenue contributor, accounting for 89.3% of FY26’s group revenue.

The manufacturing and trading of HDPE pipes contributed 10%, while the newly established solar EPCC business made up the remaining 0.7%.

Although the solar EPCC business is still in its infancy, Ting says UUE is taking a differentiated approach rather than competing directly in the crowded solar installation market.

The group instead seeks to leverage its core competencies in power infrastructure engineering to enter the interconnection facilities segment for utility-scale solar farms, where Ting believes its technical expertise provides a competitive advantage.

However, he adds that it is still too early to gauge the eventual scale and contribution of this segment.

On its HDPE pipe manufacturing segment, Ting says the company has been able to manage margin pressures through cost pass-through mechanisms and disciplined procurement strategies.

“We have also not encountered issues in sourcing resin, supported by diversified supply channels from both Malaysia and overseas.

“Beyond procurement, we are focused on improving operational efficiencies and enhancing plant utilisation as production volumes grow.”

As for the tender pipeline, Ting says it currently stands at around RM700mil, and historically, the company has secured around 20% to 30% of tenders it participates in. For the fourth quarter ended Feb 28, UUE posted a net profit of RM7.64mil, bringing FY26 profitability to RM9.61mil, compared with RM22.97mil in FY25.

The decline was mainly due to higher administrative expenses, losses from the EPCC of photovoltaic systems segment and lower gross profit margins from Singapore operations compared with the previous financial year.

As at end-Feb 2026, the group’s total borrowings stood at RM46.1mil, against cash holdings of RM15.6mil, leaving the group with a net gearing ratio of 0.2 times.

Based on its share price of 53 sen at the time of writing, UUE is trading at about 45 times its trailing earnings, suggesting investors are expecting stronger earnings growth in the years ahead.

The stock has largely recovered from earlier losses and is now trading close to levels at the start of the year. Bloomberg consensus places its 12-month target price at 61 sen.