KUALA LUMPUR (July 20): CBH Engineering Holdings Bhd’s (KL:CBHB) rally appears to have plenty of room to run, according to TA Securities, despite having gained nearly 40% year to date.

A bullish TA Securities raised the target price of CBH Engineering to 89 sen per share from a previous 80 sen, citing that the group’s value was unfairly calculated.

The construction engineering company reported a year-to-date share price gain of 38.8%, based on last Friday’s closing price of 68 sen per share. 

However, the house noted that CBH Engineering currently trades at a price-earnings multiple of 15.3 times based on 2027 earnings forecasts of RM88.3 million, which represents only a meaningful discount to its closest peer MN Holdings Bhd (KL:MNHLDG), which trades at 20.4 times its forward price-earnings.

“We believe this valuation gap is unjustified, given the group’s superior double-digit net margin profile, healthy earnings visibility and more attractive dividend yield,” said TA Securities in a note on Monday.

At the time of writing, the counter gained one sen or 1.5% to 69 sen, valuing the group at RM1.3 billion.

Meanwhile, MN Holdings rose four sen or 1.4% to RM2.88, with a market capitalisation of RM1.92 billion.

The house projects CBH Engineering to deliver a record-high performance for the financial year ending Dec 31, 2026 (FY2026), with approximately RM600 million of its outstanding order book being expected to be recognised by the end of FY2026.

While CBH Engineering has only secured RM57.4 million in new contracts for replenishing the potential earnings, TA Securities is optimistic that the current tender book will translate into RM520 million of potential new job wins, based on a tender conversion assumption rate of 40%.