KUALA LUMPUR (June 7): Hong Leong Investment Bank (HLIB) has initiated coverage of MN Holdings Bhd (KL:MNHLDG) with a 'buy' rating at 77 sen, and with a target price of RM1.12, based on an 18 times price-earnings ratio for earnings for the financial year ending June 30, 2025 (FY2025).
In a note on Friday, the research house said the group’s strong track record in serving Tenaga Nasional Bhd or TNB (KL:TENAGA), data centre owners, and solar engineering, procurement, construction and commissioning (EPCC) contractors positions it as a strong contender for upcoming power infrastructure projects.
“With a robust order book valued at RM447.5 million, we project MN Holdings’ FY2023-25 core profit after tax to register a strong compound annual growth rate of 32.8%.
“We view the stock as a good proxy to capitalise on Malaysia’s growing power infrastructure, which is poised for multi-year growth,” HLIB said.
HLIB said as power demand continues its upward trajectory, it expects an influx of contract opportunities from TNB to bolster Peninsular Malaysia's grid system.
The research house said that propelled by the National Energy Transition Roadmap and the nation’s aspiration in growing its renewable energy capacity, coupled with burgeoning direct-current investment, there is a need to enhance the grid system to accommodate higher power generation and demand.
HLIB said TNB plans to invest a total of RM90 billion into Malaysia’s grid from 2025 to 2030, nearly double the RM46 billion allocated for the period of 2018 to 2024.
“On the regulatory front, the upcoming Regulatory Period 4 will see TNB once again step up its capital expenditure (capex) to new heights.
“The anticipated higher capex from TNB is expected to present MN Holdings with numerous contract opportunities,” the research house said.