MN Holdings (MNHLDG | 0245)

Last Price: RM1.14 | Technical Call: BUY

Company Background. MN Holdings (MNH), a CIDB-recognised G7 contractor in Malaysia, specialises in providing infrastructure and utilities construction services and solutions to clients in the power, gas, sewerage, and telecommunications industries. The group operates through 2 core business segments: underground utilities engineering and substation engineering. MNH offers a comprehensive suite of services across these segments, including engineering, procurement, construction, and commissioning (EPCC) for large-scale solar (LSS) projects, data centres, semiconductor operations, and natural gas distribution systems.

Prospects. (i) Capitalize on the rapid growth in sectors such as data centres and national infrastructure development, driven by rising electricity demand from population growth, FDI, digital economy expansion, and renewable energy initiatives. As of 10 Dec 2024, the group's order book totals RM763.7mil, with secured contracts expected to contribute to earnings over the next 2-3 years, (ii) The natural gas distribution system in Peninsular Malaysia is expanding, with significant investments aimed at enhancing the network and supporting the group's ongoing underground utilities projects, and (iii) Leverage opportunities in the water and sewage sector by addressing non-revenue water (NRW) challenges and meeting the increasing demand driven by the data centre boom.

Financial Performance. In 1QFY25, MNH posted higher revenue of RM103mil (+87% YoY) with a PAT of RM7mil (+68% YoY). This was primarily driven by the accelerated progress in construction activities for major projects within both the underground utilities and substation engineering segments, as well as an improved gross profit margin.

Valuation. MNH is currently trading at a FY25F P/E of 15x, lower than the Bursa Construction Index's 22x. In comparison, Jati Tinggi Group, which provides infrastructure utilities engineering solutions and offers services such as underground cable installation, testing & commissioning, power supply cable relocation, and substation EPCC projects, trades at a higher trailing P/E of 34.3x.

Technical Analysis. We expect further upside for MNH after it pushed above the RM1.10 resistance and hit a new record high yesterday. As the 20-day and 50-day EMAs have established their bullish crossover since early November, the upward momentum may persist in the near term. A bullish bias may emerge above the RM1.10 level with stop-loss set at RM0.99, below the 20-day EMA.

Towards the upside, near-term resistance level is seen at RM1.30, followed by RM1.40.

Entry: RM1.10-1.14

Target: RM1.30, RM1.40

Exit: RM0.99

Source: AmInvest Research - 11 Dec 2024