KUALA LUMPUR (Jan 2): Order book size seems to be a key consideration when it comes to stock picks. A fund manager and heads of equity research contacted by The Edge are more inclined to favour companies which have secured sizeable order books that offer better earnings visibility, besides the growing demand for their products or services.

The following are a few selections by the experts.

UUE Holdings Bhd — capitalising on data connectivity demand

UUE Holdings Bhd (KL:UUE), which was listed on the ACE Market in July 2024, is a proxy for data centre theme play on Bursa Malaysia.

The company is leveraging the growing demand for data centre connectivity through its exclusive horizontal directional drilling services, according to Apex Securities head of research Kenneth Leong.

“Backed by an unbilled order book of RM217 million, UUE offers earnings visibility through FY2027. The group aims to expand its production capacity by 73% to 1,600kg per hour with the addition of three new production lines,” said Leong, who set a target price of RM1.10 for the stock.

UUE shares last traded at 89 sen, representing a gain of 270.8% compared to its initial public offering price of 24 sen. At its last traded price, the company’s market capitalisation stood at RM541.4 million.

Southern Cable Group Bhd — proxy to data centre theme play

Apex Securities’ Leong also likes Southern Cable Group Bhd (KL:SCGBHD) because he sees the company is well-positioned to benefit from Malaysia’s rising power demand, driven by new data centres and industrial developments.

“Margins are expected to improve, backed by a favourable product mix in the power segment, particularly from medium-voltage (MV) cables. The export market to the US is also gaining momentum, supported by strong orders from its exclusive US distributor,” he added.

However, this isn’t a stock that is widely tracked by analysts. Apex Securities is the only securities firm recommending the stock, with a target price of RM1.27. The counter closed at RM1.24 on Thursday, an upside potential of 2.4% against Apex Securities’ target price.

Pekat Group Bhd — benefiting from energy transition

Pekat Group Bhd (KL:PEKAT), according to Apex Securities’ Leong, boasts an outstanding order book of RM360 million, which is equivalent to 1.6 times its annual revenue for the financial year ended Dec 31, 2023.

Half of the jobs the company secured are from solar power projects, ensuring earnings visibility for the next two to three years. “The recent acquisition of a 60% stake in EPE Switchgear will be a key revenue driver for FY2025,” Leong said.

He noted that Pekat is poised to benefit from government-led green initiatives, including the fifth large-scale solar (LSS5) programme, the 400MW net energy metering (NEM) quota, and the Green Investment Tax Allowance (GITA) extension.

There are four "buy" calls on the stock, with a consensus target price of RM1.21. Pekat’s share price closed at 99.5 sen on Thursday.

AME Elite Consortium Bhd — undervalued Johor industrial park player

Pheim Asset Management fund manager Khoo Zing Sheng highlighted that AME Elite Consortium Bhd (KL:AME) is being traded at price-to-earnings ratios of 6-7 times based on earnings forecasts for the financial year ending March 31, 2025, compared to peers at 8-9 times.

There are five "buy" calls on the stock, with a consensus target price of RM2.17, representing an upside potential of roughly 28% compared with Thursday’s closing of RM1.70.

“Its prospects are supported by rising construction activity in Malaysia and a record-high unbilled order book of RM1.66 billion as of September 2024,” Khoo said.

MN Holdings Bhd — growth in power infrastructure

MN Holdings Bhd (KL:MNHLDG), according to Pheim’s Khoo, offers good exposure to growth in power infrastructure, data centres, solar, and water upgrades, driven by increase in investments by Tenaga Nasional Bhd (KL:TENAGA) and demand from the Corporate Green Power Programme (CGPP).

He noted that the group’s order book reaching a record high of RM764 million in December 2024 speaks well for the company’s strong future growth potential.

There are two “buy” calls on the stock, with a consensus target price of RM1.51, against Thursday’s close of RM1.25.

Gamuda Bhd — ballooning order book with exposure to RE sector

Construction giant Gamuda Bhd (KL:GAMUDA) has secured contracts worth RM8.47 billion for the financial year ending July 31, 2025.

Pipeline projects include the Penang LRT Mutiara Line, a water treatment plant in Sabah, data centre developments, and ventures in Australia. The group aims to maintain an order book of RM40 billion to RM45 billion by the end of 2025.

Rakuten Trade Sdn Bhd head of research Kenny Yee favours Gamuda, citing its leading role in the Penang LRT project, strong overseas contract acquisitions, and a solid financial position following the sale of its toll highways.

“The group’s strong earnings visibility is supported by a record RM30 billion outstanding order book and its expansion into the renewable energy sector,” Yee noted.

Hong Leong Bank Bhd — undervalued with strong prospects

According to Rakuten’s Yee, Hong Leong Bank Bhd (KL:HLBANK) — which has 17 "buy" calls, a consensus target price of RM25.19 against its last close of RM20.40 and 23.49% upside — is undervalued. The banking stock is trading at 0.98 times its FY2026 price-to-book value (P/BV), with the potential to rise to 1.2 times P/BV.

The bank is positioned to benefit from China’s economic recovery, which could positively impact its international operations. It is also well-prepared for a potential interest rate cut in the second half of 2025, given its solid financial position.

“The loan growth has been strong at 4.9% year-to-date, focusing on retail loans such as mortgages while expanding into higher-return SME accounts. It also maintains strict loan quality standards, with some of the lowest bad loan and credit cost targets in the industry,” Yee said.

YTL Corp Bhd — strengthening position in IBS

YTL Corp Bhd (KL:YTL) recently acquired an 81.24% stake in SGX-listed NSL Ltd, enabling it to tap into the industrialised building system (IBS) market.

“YTL’s diversified project pipeline and expansion into IBS strengthen its position as a key player in the construction and infrastructure sectors,” Rakuten’s Yee commented.

He highlighted YTL Corp’s active tendering and strategic acquisitions underline its commitment to long-term growth and order book expansion.

The diversified conglomerate, however, is not on many analysts’ radar although its share price shot up 43% in 2024 after it doubled.

Currently, there are two "buy" calls on the stock, with a consensus target price of RM3.47 compared with Thursday’s closing of RM2.65.