• MN Holdings (MN) has been awarded a RM163m data centre project from a China- based customer

• YTD contract wins at RM478m surpassed our earlier RM400m replenishment target

• Raise FY25-27E earnings forecast by 10-34% after increasing order-book replenishment. Maintain BUY rating with a higher target price of RM1.45

Bagged RM163m data centre substation contract

MN Holdings (MN) has been awarded a RM163m contract from a China-based data centre (DC) operator. The contract relates to the design, build, and construction of a high-voltage Main Switching Station (SSU) and Consumer Containerized SSU for a hyperscale data centre located in the southern region of Malaysia. The contract is expected to commence work in Dec 24 and to be completed by Jul 25. This is a subsequent contract to the RM7m contract secured previously to install a container type substation for this client.

Keep breaching new heights

Inclusive of this contract, YTD contracts secured stood at RM478m, exceeding our initial replenishment assumption of RM400m for FY25. The outstanding order book reached another new record high of RM764m (or 3x FY24 revenue) with revenue visibility until FY27E. Based on an estimated 10% PAT margin for DC-related projects, we forecast this project to contribute RM16.3m PATAMI across FY25-26E. Looking ahead, we expect contract win momentum to remain strong, supported by its record-high tender book of RM1.2bn as of Nov24, which is diversified across industries including TNB/Sarawak Energy (74%), solar (9%), DC (5%), water sewerage (3%), and others (10%). On top of that, there are several exclusive bids where MN holds the first refusal rights with key clients, potentially adding another c.RM150m to its tender book.

Maintain BUY with higher TP of RM1.45

We raise our FY25-27E earnings forecast by 10-34% after imputing a higher order book replenishment of RM600m/ RM500m /RM550m (from RM400m /RM480m /RM550m previously). We reiterate our BUY rating with a higher target price of RM1.45 (from RM1.20), pegged to an unchanged 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 - 11 Dec 2024