Hong Leong Investment Bank Bhd (HLIB) has maintained an OVERWEIGHT call on the power infrastructure sector for the first half of 2026, with MNH (BUY; TP: RM2.23) and SCGBHD (BUY; TP: RM2.59) highlighted as top picks.
The research house said earnings momentum is expected to extend through 2026, supported by steady job flows from Tenaga Nasional Bhd, data centres and the rollout of LSS5 and LSS5+, which will add fresh demand for grid and substation works.
HLIB noted that tighter financing conditions are constraining smaller, unlisted players, favouring listed companies with stronger balance sheets and access to funding.
Policy support, including MIDA’s cable import restrictions and Tenaga’s preference for local contractors, further reinforces the market position of domestic players and limits foreign competition.
Earnings growth is expected to be led by M&E contractors and cable manufacturers, while MEP companies may see flat or single-digit growth.
For M&E contractors such as MNH, Jati and CBH, orderbook coverage of between 1.6 times and 5.2 times provides clear earnings visibility over the next 12–24 months.
Cable manufacturers, including SCGBHD, OSK and MTEC, have largely drawn down first-year allocations from Tenaga’s 1+1 contracts, with subsequent contracts scheduled for tender in August 2026.
HLIB highlighted that solar infrastructure will drive the next wave of demand, with the LSS5 and LSS5+ pipeline of approximately four gigawatts generating an estimated RM3.6 billion in addressable market for interconnection facilities and RM1.6 billion of cable demand.
Strong electricity demand growth from energy-intensive sectors, particularly data centres, will further support the sector.
The research house concluded that listed power infrastructure companies with capital access and scale are best positioned to capitalise on the multi-year upcycle, underpinned by grid expansion, ongoing national power supply growth and supportive government policies.
