Company Background. MN Holdings (MNHLDG) specialises in providing infrastructure/utilities construction services & solutions to customers in the power, gas, sewerage and telecommunications industries in Malaysia. The group operates under 2 core business segments: underground utilities engineering and substation engineering. MNHLDG offers a comprehensive range of services for these segments, including engineering, procurement, construction and commissioning (EPCC) works for large scale solar (LSS) projects, data centre projects, EPCC work for semiconductor operations and natural gas distribution systems.

Prospects. (i) Tap into fast-expanding sectors such as data centres and national infrastructural development. Rising demand for data centres, driven by technological advancements and increased reliance on digital infrastructure, aligns seamlessly with the group’s expertise in powering these facilities, (ii) Proactively tendering for projects in underground utilities & substation engineering to maintain a healthy order book and ensure consistent earnings. As at 29 May 2024, the group’s order book totals RM447.5mil, with secured contracts contributing to earnings over the next 2-3 years, and (iii) EPCC work for solar farms diversifies the group’s portfolio and strengthens its role in renewable energy, creating new opportunities and enhancing sustainability.

Financial Performance. In 9MFY24, MNHLDG posted higher revenue of RM181.2mil (+59% YoY) with a PAT of RM13mil (+76.8% YoY). This was mainly attributed to heightened construction activities within both the underground utilities and substation engineering segments, as well as a higher gross profit margin.

Valuation. MNHLDG is currently trading at an attractive FY25F P/E of 14.8x, which is lower than the Bursa Construction Index’s 5- year forward average of 18x. For comparison, Samaiden Group, involved in EPCC of solar photovoltaic systems and power plants, trades at a much higher FY25F P/E of 20x.

Technical Analysis. MNHLDG’s buying interest is back after it broke out of the 1-month bullish flag pattern with a long positive candle 2 weeks ago. With the 20-day EMA remaining above the 50-day EMA since a bullish crossover in early May, the upward momentum may persist in the near term. A bullish bias may emerge above the RM0.84 level with stop-loss set at RM0.76, below the 50-day EMA. Towards the upside, near-term resistance level is seen at RM1.00, followed by RM1.10.

Source: AmInvest Research - 24 Jun 2024