PETALING JAYA: HE Group Bhd
’s strong run of contract wins is expected to provide greater earnings visibility, as robust data centre activity continues to drive demand for its electrical works.
In a note to clients, Maybank Investment Bank Research (Maybank IB) said the group’s latest RM124mil sub-contract for a data centre in Johor has lifted its outstanding order book to RM441mil.
HE Group is a electrical engineering services provider specialising in in-building power distribution systems for high-value industries, including the semiconductor, data centre and pharmaceutical sectors.
The research firm said HE Group’s 2026 year-to-date contract win momentum came in stronger than its initial assumption of RM350mil.
To reflect the strong order win momentum, Maybank IB has raised its financial year 2026 (FY26) to FY28 earnings forecast by 3% to 48%.
“Post-earnings adjustments, we raise our target price to RM1.35 (from RM0.96) based on unchanged 18 times FY27 price-earnings.”
The latest RM124mil job was secured from an engineering, procurement and construction management company for the main electrical works of a data centre in Johor.
The project is expected to take 18 months to complete, with completion targeted for March 2028.
“Assuming a 9% profit after tax margin for data centre electrical fit-out projects, Maybank IB estimates the contract will contribute RM11mil to earnings over FY26 to FY28.
“Given the robust order momentum, we raise our FY26 to FY28 replenishment assumptions to RM450mil, RM400mil and RM400mil, respectively, from RM250mil-RM350mil previously.
“This is supported by an ongoing RM1bil tender pipeline, of which about 80% comprises data centre projects, with the balance from semiconductor and pharmaceutical projects.
“Based on our industry channel checks, we also expect semiconductor tender activity to pick up further in the first half of FY27,” the research firm added.
HE Group’s revenue has been primarily driven by the semiconductor industry, which contributed 79.3% of FY25 total group revenue.
Maybank IB anticipates a ramp up in semiconductor capital expenditure in the first half of 2027.
The research firm noted that the group has made meaningful inroads into the data centre industry, with projects accounting for around 60% of its ongoing RM441mil order book.
Meanwhile, Phillip Capital Research raised its 2026 to 2028 earnings per share (EPS) forecasts by 4% to 11% on higher replenishment assumptions over that period. It also maintained a “buy” call with a higher 12-month target price of RM1.45, from RM1.30 before.
“Trading at 14.9 times forward 2027 price-to-earnings ratio, valuation remains attractive in our view, underpinned by our forecasted 66% EPS growth for 2027.
“We see further upside to valuation as earnings momentum strengthens, with additional contract wins in the data centre and semiconductor segments serving as key re-rating catalysts,” Phillip Capital Research said.
