MNH rides data centre boom with strong pipeline

PETALING JAYA: Analysts are overall positive on MN Holdings Bhd’s (MNH) near-term performance, underpinned by its expanding order book and rising exposure to data centre (DC) infrastructure.

According to Hong Leong Investment Bank (HLIB) Research, MNH’s order book remained robust at RM1.13bil, with nearly 90% comprising substation engineering jobs.

The group is actively bidding for RM1.85bil worth of projects, with the majority tied to DC and Tenaga Nasional Bhd (TNB)-related infrastructure.

“MNH believes the market is flush with job opportunities and remains selective, focusing on high-margin projects or those that could strengthen its track record,” said HLIB Research.

Beyond DC works, the group is also eyeing several interconnection facility projects under the upcoming fifth large scale solar (LSS5) programme.

Additionally, HLIB Research noted that demand from TNB and the private sector has led to a limited pool of qualified contractors.

With LSS5, LSS5+ and LSS6 expected to unlock around 6 GW of power infrastructure projects over the coming years, listed mechanical and electrical players like MNH, which has access to capital, are well-positioned to benefit from this favourable trend.

Notably, MNH recently secured a RM39.5mil contract from Customer A for a consumer landing station project in Johor.

HLIB Research views this win as a validation of MNH’s execution track record, potentially positioning it for an additional RM130mil worth of packages at the same site.

Following this, HLIB Research revised its FY26 and FY27 earnings forecasts upwards by 6.8% and 7.5%, respectively, and maintained a “buy” call with a higher target price of RM1.88.

Echoing this optimism, Maybank Investment Bank Research (Maybank IB) also maintained a “buy” rating with a RM1.69 target price, citing the recent engineering, procurement, construction and commissioning contract with Customer A as a key growth driver.

Furthermore, Maybank IB noted that the contract was within its job win assumptions and made no changes to earnings forecasts.

It highlighted MNH’s growing foothold in DC infrastructure, which now accounts for a significant share of both its order and tender books.

The research house expects demand in the segment to remain strong over the next three years and projects RM500mil in new job wins annually between financial year 2025 (FY25) and FY27.

Building on this, Phillip Capital Research stated that the latest RM40mil substation extension project has lifted MNH’s order book to RM1.1bil, reflecting a 4.5 times FY24 revenue cover.

It estimates a RM4mil contribution to FY26 earnings and sees further upside from Customer A’s potential RM250mil pipeline.

With MNH expected to have first right of refusal, the group stands to benefit from these future awards.

Phillip Capital Research maintained a “buy” rating with a target price of RM1.72, citing strategic exposure to the fast-growing DC segment and strong client retention as key strengths.