Southern Score set for robust DC expansion

PETALING JAYA: Reputable hyperscale data centre (DC) operators have begun awarding internal mechanical and engineering (M&E) contracts to local firms, signalling growing confidence in domestic capabilities, says CIMB Research.

Against this background, CIMB Research said Southern Score Builders Bhd is an “emerging dark horse” to Malaysia’s internal data centre infrastructure rollout.

In a non-rated report, the research house said the competition for external M&E packages such as underground cabling and substations is getting rife in Malaysia.

However, internal M&E scopes such as those demanding greater technical integration and site-specific designs offer more resilient net margins of 10% to 15%.

“Southern Score offers exposure to Malaysia’s rising local share of internal DC M&E works amid a shortage of quality specialists to meet surging tender demand.”

Having clinched the RM103mil design-and-build award for electrical services in September 2025, via 51%-owned SJEE Engineering Sdn Bhd, Southern Score has quickly built an impressive track record in DC works.

The group is now involved in the internal M&E works for three to four major hyperscalers.

As of end-June 2025, the company’s M&E order book stood at RM213mil, coupled with an active tender book of RM384mil.

These are entire DC-related bids.

Beyond DCs, Southern Score also has a robust internal pipeline in affordable housing, with emerging healthcare prospects, stated CIMB Research.

As of June 30, Southern Score held a civil order book of RM1.2bil and targets a base annual contract replenishment rate of RM800mil to RM1bil.

This is underpinned by turnkey projects for independent landowners, public infrastructure works, and strong ties with affordable housing developers Platinum Victory and Radium.

“Further upside comes from Radium Healthcare, beginning with its 140-bed A Famosa Specialist Hospital,” it added.

In the financial year ended June 30, 2025 (FY25), Southern Score posted its highest ever core net profit of RM40mil, which rose 28% year-on-year.

The group also maintained a bottom-line growth above 20% over FY23 to FY25.

According to CIMB Research’s forecast, Southern Score’s core profit is set to grow at a compounded annual growth rate of 59% over FY25 to FY27.

This is backed by an FY26 price-to-earnings growth multiple of 0.3 times and FY26 to FY27 return on equity of 40%.

The group is also in a net cash position, or RM26mil in FY25.

“The stock’s institutional holding is at its peak of 15% as of end Oct 2025.

“Potential re-rating catalysts are larger data centre contract wins and healthcare facilities prospects,” added the research house.

“Downside risk is execution hiccups, particularly for time-sensitive DC jobs.”