Kenanga Research has raised its target price for Kee Ming Holdings Bhd to RM2.84 from RM2.34 previously, after lifting earnings forecasts on stronger-than-expected order book replenishment and growing opportunities in data centre and high-voltage electrical works.
Kee Ming recorded core net profit (CNP) of RM6 million for 1QFY27, down 30% quarter-on-quarter but within expectations, accounting for 21% of both Kenanga’s full-year forecast and consensus estimates.
The weaker quarterly performance was mainly due to a less favourable project mix, including a lower contribution from higher-margin industrial projects and the absence of variation order (VO) contributions.
Core net profit margin consequently narrowed by nine percentage points quarter-on-quarter to 13%.
Kenanga views the weakness as largely timing-related, noting that a recently secured letter of award worth about RM70 million was only obtained towards the end of the quarter and had yet to contribute meaningfully.
No year-on-year comparison was available as Keeming was only listed in February 2026.
Kenanga expects earnings momentum to strengthen over the coming quarters as Keeming works through its RM246 million outstanding order book.
From the second quarter onwards, earnings are expected to be driven primarily by two solar interconnectivity projects as execution accelerates towards their respective commercial operation dates.
The order book has strengthened further following a recent RM40 million contract, taking year-to-date FY27 contract wins to approximately RM143 million.
More significantly, Kee Ming has a RM2.2 billion tender book, almost half of which is related to data centres.
Data centre opportunities account for 47% of tenders, followed by infrastructure at 27%, industrial projects at 16%, commercial at 7% and residential at 4%.
Kenanga sees data centres as Keeming’s next major growth area as the electrical engineering contractor moves into higher-value work.
During the quarter, Keeming secured its maiden RM21 million data centre contract involving underground infrastructure and data hall electrical works.
The research house believes the company’s track record in 132kV substations and interconnectivity works puts it in a favourable position as data centre owners increasingly seek contractors with strong balance sheets and proven high-voltage execution capabilities.
Kee Ming has completed four data centre projects to date, according to the report.
Kenanga also sees potential opportunities from Tenaga Nasional Bhd-related high-voltage projects and Keeming’s expansion into Sarawak, both of which could provide multi-year project execution and greater earnings visibility.
Following stronger contract replenishment, Kenanga raised its FY27 and FY28 order book assumptions to RM313 million and RM398 million, respectively, from RM268 million and RM353 million previously.
The research house consequently lifted its FY27 earnings forecast by 8% and FY28 forecast by 15%.
The revised forecasts incorporate improving data centre order flows, particularly smaller mechanical and electrical packages where Kee Ming has been gaining traction.
However, Kenanga said its estimates have yet to include any sizeable contract wins involving data hall electrical works or TNB projects, which could provide further earnings upside.
Following the revisions, Kenanga increased its valuation multiple to 22 times FY28 forecast earnings from 18 times previously, resulting in the higher RM2.84 target price.
