CBH Engineering Bhd is positioned for stronger earnings growth in the second half of its financial year 2026, driven by accelerated execution of its data centre order book and a robust pipeline of tender opportunities, according to a recent analysis by Phillip Capital Research.
The research firm projects CBH’s revenue for the second half of 2026 to range between RM310 million and RM360 million, supported by the execution of its outstanding order book valued at RM890 million. Management expects to recognise 35% to 40% of this order book in the latter half of the year, which would translate into full-year revenue of RM520 million to RM570 million.
Phillip Capital Research forecasts a core net profit for the third quarter of 2026 between RM26 million and RM30 million, up from RM25 million in the second quarter and RM6 million in the same quarter last year. The upward earnings trajectory reflects a notable acceleration in contract awards.
Year-to-date contract wins total RM477 million, accounting for 68% of Phillip Capital Research's replenishment assumption, and expanding the company’s order book to RM890 million. The research house highlighted that contract award momentum significantly increased over the past two months, following a slower start earlier in the year when CBH secured only RM60 million of wins during the first seven months of 2026. This acceleration suggests CBH remains on track to meet, and possibly surpass, its management’s internal target of RM600 million in contract wins for the year.
The company also maintains a tender book worth RM1 billion, providing visibility for future order replenishment, with about 80% of the pipeline consisting of data centre projects. Currently, CBH is bidding on eight projects. Based on its historical tender win rate of 30% to 40%, Phillip Capital Research estimates these bids could generate an additional RM300 million to RM400 million in contract awards, sustaining the order book through 2027 and 2028.
Reflecting better-than-expected project margins, the research firm raised its earnings forecasts for 2026 through 2028 by 21%. CBH reported a net profit margin of 20% in the first half of 2026, surpassing the previous forecast of 14% and prompting a revision of the margin outlook to 17% on a full-year basis. The improved margins stemmed from favourable project composition, with data centre substation work comprising 90% of the order book, alongside benefits from operating leverage.
However, for the third quarter, margins are expected to normalize to around 17% as newer contracts with different project mixes enter execution. Management continues to guide for net margins on a per-project basis between 12% and 15%.
Phillip Capital Research reaffirmed its "buy" rating on CBH Engineering and raised the 12-month target price to RM1.35 from RM1.11, citing the company’s strong participation in Malaysia’s power infrastructure cycle and an established track record with hyperscale clients.