PETALING JAYA: HE Group Bhd
warrants a higher valuation given its improving contract momentum, stronger margins and a better earnings outlook, says Phillip Capital Research.
Core net profit for the six months of financial year 2026 (6M26) grew 31% year-on-year to RM8mil, which was in line with both its and consensus’ expectations.
The latest results were broadly in line overall, with recently secured projects still in the early stages of execution, said Phillip Capital Research.
In a note to clients, the research house said: “We expect earnings recognition to accelerate in the second half of 2026 as the projects enter a faster recognition phase, underpinned by a record-high order book.”
HE Group secured RM280mil in new contract wins for 6M26, which is well above its past three-year average of RM87mil.
Post-earnings upgrade, the research house maintained a “buy” call on HE Group with a higher target price at RM1.30 from RM1. Key risks include slower-than-expected order book replenishment, unforeseen project delays and cost overruns.
