EI Power Bhd is poised for stronger earnings growth in the second half of financial year 2026 (2H26) as its expanded order book begins to translate into project execution and revenue. The company’s record backlog, driven largely by contracts from data centre customers, is expected to sustain an improved earnings trajectory into financial years 2027 and 2028 (FY27-FY28).
According to research from Hong Leong Investment Bank (HLIB), EI Power’s order book more than doubled from RM90 million in the first quarter of FY26 to RM219 million as of July 1. This growth was propelled by EI Power’s largest contract to date alongside additional wins from existing Western, Chinese, and local data centre clients. The report notes that these projects entering the execution phase should help accelerate earnings growth beyond the modest 3.9% quarter-on-quarter increase recorded in the second quarter of FY26.
HLIB highlighted that the RM174 million in contracts secured year-to-date already accounts for 96% of its full-year forecast, with four months left in FY26. Furthermore, EI Power’s tender book stands at RM665 million, with 80% located in Malaysia, indicating the possibility of order wins surpassing current expectations. After excluding the RM90 million anchor contract secured in the first half of FY26, the firm has averaged monthly replenishments of around RM10 million, suggesting a potential total of approximately RM210 million in new contracts for the full year if this pace continues.
Much of the ongoing tender activity involves subsequent phases of existing data centre developments, which typically award contracts progressively as construction advances. HLIB also pointed to additional upside from the RM90 million contract, which presently covers only 60% of the customer’s overall site design, leaving room for further significant follow-on awards.
Looking beyond FY26, HLIB anticipates that EI Power’s Western and local data centre clients will expand operations from single sites to multi-site campuses, encouraging more sustained and recurring contract flows. The broker also cited an indication from Tenaga Nasional Bhd, which revealed that the Data Centre Task Force has approved an additional five gigawatts of data centre capacity, potentially driving stronger project activity through FY27 and FY28.
HLIB estimates this capacity pipeline could translate into RM750 million to RM1 billion worth of addressable contracts for EI Power, assuming RM15 million to RM20 million in works per 100 megawatts. As a result, the research house has raised its earnings forecasts for EI Power by 14%, 11%, and 22% for FY26, FY27, and FY28 respectively. It maintained a “buy” rating on the stock and lifted its target price to RM1.09 per share, up from 88 sen, reflecting a higher price-to-earnings multiple.
The report emphasized EI Power’s position as a niche player in the data centre sector, benefiting from higher contract values and improved margins due to the technical complexity of integrating generators and fuel distribution systems. In addition to its Malaysian business, EI Power’s RM90 million tender book in Thailand also presents further growth opportunities, with five outstanding tenders involving current Malaysian customers.