• We remain upbeat on MN’s earnings growth prospects backed by its RM601m order book and promising tender prospects

• The higher tender book of RM1.2bn has not included several priority DC work packages totalling c.RM300m, which are expected to be rolled out in 1HCY25

• Maintain BUY rating and RM1.20 target price

1QFY25 was off to a strong start

MN Holdings (MN) posted revenue of RM103m (+87% YoY) and core net profit of RM10m (+155% YoY) in 1QFY25, alongside 1ppts in EBITDA margin. The group secured RM315m of new orders in FY25, bringing the outstanding order book to RM601m, translating to a strong 2.4x cover on FY24 revenue. The order book mainly consists of orders from DC (48%), TNB (31%), solar (4%), water sewerage (4%), and others (10%). The solid order book is expected to sustain earnings growth momentum in FY25E (+65% YoY).

Record-high tender book signals promising prospects ahead

The group’s record-high tender book of RM1.2bn (+20% QoQ) as of Nov24 reaffirms our positive outlook on MN. TNB-related projects form the largest portion at 43%, recently approved under TNB Green Lane Pathway specifically for data centres (DC), followed by Sarawak Energy (31%). The remaining tender books are diversified across industries, including solar (9%), DC (5%), water sewerage (3%), and others (10%). We noted that MN has excluded bids where it holds the priority of first right refusals with key clients, potentially adding another c.RM300m (25%) to its tender book. The expected tender results to be announced in 1HCY25 include Sarawak Energy and several utility infrastructure work packages for two main DC clients. With its record-high tender book, we believe MN is on track for FY25, surpassing FY24 new contract wins of RM349m.

Maintain BUY with TP of RM1.20

We reiterate our BUY rating and RM1.20 target price, pegged to 20x PE multiple on fully diluted CY25 EPS. We like MN as a proxy for Malaysia’s expanding power infrastructure and strategic exposure in the rapidly growing DC and solar sectors. Key risks to our BUY call include slower-than-expected project rollouts affecting order book replenishment and unforeseen delays.

Source: Philip Capital Research - 5 Dec 2024