KUALA LUMPUR (Aug 2): Hong Leong Investment Bank (HLIB) Research expects MN Holdings (KL:MNHLDG) to get more contracts in the coming months, reiterating its “buy” rating on the stock with a higher target price (TP) of RM1.62 (previously RM1.55), following contract wins with Tenaga Nasional Bhd (TNB)(KL:TENAGA).

“We anticipate more contract awards in the coming months, particularly from the Corporate Green Power Programme (CGPP) side. 

“We raised our FY2025f/FY2026f (forecasts) by 6%, incorporating a higher contract wins assumption of RM320m (million) (from RM245m) for FY2025f,” it said in a note.

The group on Friday secured an RM86 million contract from TNB to establish a new 132/11kV voltage gas-insulated substation in Kg Awah, Pahang.

This is the second contract of the year, the first being a RM136 million contract announced last week, lifting MN Holdings’ order book to an all-time high of RM654.5 million, said HLIB.

HLIB Research expects that TNB will provide more contracts to the group, in order to meet its projected electricity demand growth of 1.6%-4.3%.

“Looking ahead, the upcoming RP4 (Regulatory Period 4) for 2025-2027 will see TNB once again stepping up its capex to ensure the security of power supply, and meet the projected electricity demand growth of 1.6%-4.3%. 

“This anticipated higher capex from TNB is expected to provide MN Holdings with more contract opportunities,” it said.

Additionally, HLIB Research said that of the group’s RM1 billion tender book, around 40% was attributed to TNB projects. 

“Given MN Holdings’ strong track record in undertaking UUE (underground utilities engineering) and substation engineering jobs for TNB, we anticipate more projects from TNB in future,” the research house added. 

Furthermore, the house noted that players like MN Holdings may benefit from the strong private sector demand for power infrastructure solutions (UUE and substation), incentivising TNB to offer better pricing to secure contractors.

“We favour MN Holdings for its strong exposure to rapidly growing sectors, such as solar and data centres.

“Additionally, the group is seen as a proxy for growing power demand in Malaysia and a beneficiary of TNB’s capex upcycle,” HLIB Research concluded. 

MN Holdings’ shares were unchanged at 94 sen at time of writing on Friday morning.