PETALING JAYA: CBH Engineering Holding Bhd is likely to sustain its margin expansion into the second half of financial year 2026 (2H26), supported by a more favourable project mix.
Higher-margin data centre (DC) substation projects now account for around 90% of its outstanding order book, according to TA Research.
The research firm noted that the multidisciplinary engineering service provider’s 1H26 core net margin of 20% was well above its 15% assumption.
It said CBH delivered 1H26 core net earnings of RM42.6mil, up 170.4% year-on-year.
“Based on the latest total unbilled order book of RM890mil, management guided that 35% to 40% of this outstanding order book is expected to be recognised in 2H26.
“This translates into an order-book burn rate of between RM311.5mil and RM356mil, representing approximately 48% to 69.1% growth versus 1H26 of RM210.5mil,” the research firm said in a note to clients.
The research firm said the order book execution rate brings FY26 total revenue to RM522mil to RM566.5mil, broadly in line with its forecast.
“Assuming a 17% net margin, up from 15% previously, in line with our expectation of stronger margin continuation in 2H26 following the strong performance in 1H26, this implies net earnings of RM88.7mil to RM96.3mil, well above our previous forecast of RM81.1mil.
“This puts the group on track to deliver an even stronger record-high FY26 performance.”
Year-to-date for FY26, CBH has secured RM477.3mil worth of new jobs, achieving around 79.6% of TA Research’s FY26 new job win assumption of RM600mil.
Based on the company’s historical tender success rate of 25% to 30%, the research firm estimated that the existing tender pipeline could translate into RM250mil to RM300mil of additional order wins, providing further visibility on order-book replenishment.
“Importantly, the RM1bil tender book only captures formally submitted tenders, while additional DC-related opportunities are still being finalised and have yet to be reflected in the pipeline,” it said.
TA Research has a “buy” call on the stock with a RM1.42 target price, up from RM1.12 previously.
