HE Group Berhad through its wholly-owned subsidiary, Hexatech Engineering Sdn Bhd, has just announced the success of winning a contract worth RM86 million for the construction of a substation in Pasir Gudang, Johor. The project involves the design, supply, installation and testing of a 132kV main substation for a data centre.
HIGHLIGHT
New contract value: RM86.0 million
Target price (TP): RM0.54
Current price: RM0.355
Potential return: 53.4%
Public Investment Bank Recommendation: ‘Outperform’
IMPORTANT DATES
11 May 2026: Date the subsidiary receives the Letter of Acceptance (LOA)
18 May 2026: Expected date for site works to commence
17 May 2027: Expected date for full project completion
The success also boosts the company’s overall orderbook to approximately RM645 million, providing excellent revenue visibility for the next two years.
Analysts view this development as very positive as it indicates continued momentum in winning contracts. With stable profit margins in electrical engineering, the new contract is expected to contribute significantly to the company’s net profit for the financial years 2026 and 2027.
Current valuation is still considered cheap compared to its growth potential. With a target price of RM0.54, there is significant upside compared to the current market price.
WHAT INVESTORS SHOULD WATCH
The main thing that could drive the share price going forward is the company’s ability to continue to win bids for other data center infrastructure projects.
Investors should monitor the upcoming quarterly financial reports to ensure that profit margins remain intact despite the increase in construction material costs. In addition, project implementation according to the set schedule is critical to avoid any penalties or additional costs.
OPPORTUNITIES
Growth in the data center sector: HE Group is strategically positioned to benefit from data center investments in Malaysia.
Shariah-compliant status: Attracts interest from a wider group of investors.
Risks
Project delays: Implementation risks that could affect cash flow.
Industry competition: Intense competition in electrical project bidding may pressure margins.
Raw material costs: Rising copper and electrical equipment prices could increase operating costs.
Overall, sentiment towards HE Group is very positive driven by this latest contract win. The main catalysts going forward will be new contract announcements and stronger financial performance in the coming quarters. Investors are advised to monitor the company’s project bidding momentum as an indicator of future growth.
