MNHLDG: Double bottom

Ended with a bang. MNHLDG concluded FY6/24 on a high note, achieving a 48.8% YoY increase in core PAT to RM20.0m. Notably, 4QFY24 core PAT of RM5.7m marked a record high since the company's listing. This strong performance was driven by an 80.2% QoQ surge in the UUE segment, thanks to the maiden contribution from a RM98m contract with a data centre player. Building on this momentum, UUE is expected to maintain its robust contribution in the upcoming quarter, while the substation engineering segment is poised to boost earnings further, underpinned by potential stronger billings in the substation segment amid earnings recognition upcycle over the next two quarters.

Record year on the making. With a buoyant order book of RM611m and a strong tender book of RM1bn, we are confident that FY25 will mark another year of record earnings for MNHLDG, barring any unforeseen disruptions. In 2HCY24, we expect more CGPP-related contracts to be announced. Having secured only one of the 32 SPPs so far, we anticipate that power infrastructure projects for CGPP will be finalized in coming months to meet completion targets. Beyond that, the tender opportunities for the group remains promising, particularly from TNB, solar, and the burgeoning data centre sector. The upcoming RP4 for 2025-2027 will see Tenaga once again stepping up its capex, opening doors to additional Substation and UUE projects. Furthermore, the influx of data centres will drive demand for power infrastructure and benefit MNHLDG, known for its strong track record with top data centre operators in Malaysia.

All in, we project MNHLDG’s FY25 and FY26 earnings to grow by 54% and 8.4%, respectively. We remain positive on MNHLDG due to its strong exposure to rapidly growing sectors such as solar and data centres. Additionally, the company is well-positioned as a proxy for rising power demand in Malaysia and stands to benefit from Tenaga’s capex upcycle.

Double bottom. MNHLDG is pending for a double bottom breakout, with indicators showing uptick bias. A successful breakout above RM0.95 neckline will spur the price toward RM1.02-1.12-1.22 region. Cut loss at RM0.83.

Collection range: RM0.88-0.90-0.94

Upside targets: RM1.02-1.12-1.22

Cut loss: RM0.83

Source: Hong Leong Investment Bank Research - 24 Sept 2024