We initiate coverage on MNH with a BUY recommendation and TP of RM1.12, based on 18x P/E on FY25 earnings.

⭐ The group’s strong track record in serving Tenaga, data centre owners, and solar EPCC contractors positions it as a strong contender for upcoming power infrastructure projects.

⭐ Unlike industries such as property and manufacturing, DCs consume substantial amounts of electricity for their server and cooling system operations. With the continued influx of DC investments and the growth of AI-driven DC, this sector will necessitate enormous power supply and infrastructure.

⭐ Apart from DC, the anticipated expansion in power infrastructure driven by the growth of the solar, E&E, and EV sectors is set to further enhance the group’s earnings outlook.

⭐ The solar sector, in particular, is expected to be a strong catalyst for boosting MNH’s order book, given the projected robust growth in RE capacity until 2050.

⭐ With a robust order book valued at RM447.5m, we project MNHLDG’s FY23-24 core PAT to register a strong CAGR of 32.8%.

⭐ We view the stock as a good proxy to capitalize on Malaysia’s growing power infrastructure, which is poised for multi-year growth.

Sam, HLIB

Source: Hong Leong Investment Bank Research - 7 Jun 2024