Kawan Renergy Berhad (KENERGY) is currently seen as one of the most interesting industrial engineering and energy solutions companies to watch. The company has a major advantage as 84% of its profit forecast for the financial year 2026 (FY26F) is already secured by an existing order book worth RM157 million.
This provides strong protection to investors against the risk of financial performance downside.
Highlights
Kenanga Recommendation: ‘Outperform’ (Excellent)
Target Price (TP): RM0.73
‘Order book’ value: RM157 million
Potential upside: 35%
Current sentiment: Very Positive
KENERGY currently has a potential project pipeline worth RM370 million. This pipeline includes inquiries for data center gas power plants, co-generation plants, and process plants that promise higher profit margins than the industry average.
In addition, KENERGY’s status as the exclusive distributor for Rolls Royce diesel generators provides direct exposure to the rapidly growing data centre sector in Malaysia.
The company has just secured its first order worth RM70 million in this sector and is currently bidding for another project that is three times larger in size. Its in-house fabrication capabilities have also helped the company maintain better profit margins than its competitors.
The main thing that could move KENERGY’s share price after this is the announcement of new contract awards from the RM370 million project pipeline.
Investors should also monitor the development of large-scale data centre project bids as they will be a significant long-term growth catalyst. The momentum of increasing order books will provide additional confidence to the market.
Risks
Delays in Contract Additions: Despite the potential for large project opportunities, slow acquisition rates can weigh on sentiment.
Rising Raw Material Costs: A global risk that could weigh on engineering project profit margins.
Project Execution Risks: Any disruption or delay in completing existing projects.
KENERGY offers a very balanced risk-reward profile for investors seeking exposure to the energy and data center sectors. With strong order book support and growth potential from new bids, the stock has ample room to rise. News of a large contract acquisition is expected to drive the share price towards a target of RM0.73
