KUALA LUMPUR (Sept 25): UUE Holdings Bhd (KL:UUE) has limited near-term upside following a rally in its share price, RHB Investment Bank Bhd (RHB IB) said as it downgraded the stock.
“We believe near-term catalysts are priced in following the year-to-date performance of 43%,” the research house said in a note on Friday.
RHB IB downgraded UUE to “neutral” from “buy” but raised its target price to 80 sen from 70 sen, citing the utilities engineering firm’s higher margins, an expected 28% compound annual growth rate in earnings between the financial year ended Feb 28, 2026 (FY2026) and FY2029, and improved near-term earnings visibility from Singapore billings.
The research house continued to view UUE’s latest Singapore contract wins positively, noting that such jobs typically generate gross profit margins of about 30% to 35%.
UUE, through its wholly owned subsidiary Konnection Engineering Pte Ltd, has secured four subcontracts in Singapore worth a combined S$9.3 million (RM29.7 million), involving the installation of high-density polyethylene pipes using horizontal directional drilling for 400kV power cable infrastructure.
The contracts were awarded by Wee Guan Construction Pte Ltd, with SP PowerAssets Ltd as the principal.
The latest awards lift UUE’s FY2027 year-to-date contract wins to RM127.9 million and its existing order book to RM545 million.
Shares of UUE rose as much as 6% to 80 sen in early trading on Friday before paring some gains to 78.5 sen at the time of writing. Some 5.45 million shares changed hands.
At 78.5 sen, UUE had a market capitalisation of RM716.3 million.
Meanwhile, Public Investment Bank Bhd also downgraded UUE to “neutral”, saying execution remained a key constraint for the company’s Singapore operations despite its sizeable project pipeline.
The research house said Singapore execution had been uneven in recent quarters, with Singapore revenue standing at RM9.9 million in the first quarter of FY2027.
Activity was affected by a stop-work order in April following an accident within the project's vicinity, while the preceding quarter had also faced work-permit constraints, it said.
Although deployment subsequently improved to all 10 internal teams by July, Public Investment Bank estimated that Singapore billings could improve by only 10% to 20% from the recent RM9 million to RM10 million quarterly run rate, subject to site readiness and the absence of further disruptions.