KUALA LUMPUR (July 30): Powerwell Holdings Bhd (KL:PWRWELL) has gathered more analyst coverage with the latest bullish call coming from Apex Securities, initiating coverage with a target price (TP) of RM1.10 and a "buy" recommendation.

The positive outlook stems from their unique position amidst the data centre investment upcycle in Malaysia, a capacity expansion in regional branches as well as their recent acquisition of Tenaga Kenari.

The TP implies a 16.2 times FY2027–2028 blended earnings per share of 6.8 sen, and a 29.4% upside to its current price of 85 sen.

"Malaysia's data centre capacity is set to nearly triple by 2030, implying a RM128–162 billion addressable M&E market where Powerwell, the only Malaysian manufacturer licensed across both Siemens LV and MV ranges," said the house in a note on Thursday.

The research house said the Tenaga Kenari acquisition offers more than just an initial 4.5%/3.8% uplift to group core net profit in FY27/FY28, it also hands Powerwell its first East Malaysia manufacturing base and an established Sarawak Energy Bhd relationship.

It noted that Powerwell’s strength comes from their proprietary brand that can be fully customised to each customer’s requirement.

With the increased complexity in construction and focus on renewable energy needs, this capability pushes Powerwell to become a top choice and allows them to capture the demand growth from Malaysia’s data centre construction boom.

To date, data centres already make up 35% of the company’s RM150 million order book, and 73% of its RM410 million tender pipeline. 

Apex Securities also noted Powerwell’s FY2026 core net profit rose to over RM24 million in FY2026, signifying a 15% growth year-on-year, and becoming the first time the company has ever cleared the RM20 million line.

Apex Securities views this progression as structural rather than one-off, as they expect the company’s profits to grow continuously, with an annual compounding rate of 45.7% to eventually arrive at RM51 million in FY2028.

This forecast is backed by Powerwell’s plans to expand output capacity through their Indonesian and Sarawak counterparts, coupled with the ongoing process automation initiatives which would allow the Group to scale into larger, higher value projects in the future.

The company’s healthy cash generation, increased dividend payout and bonus issue announcement highlights management’s confidence in the sustainability of future earnings.

However, Apex Securities have also noted a few key risks including slower artificial intelligence infrastructure investments, delays in hyperscale developments, and regulatory changes affecting data centre developments.