M+ Global has upgraded EITA Resources Bhd to BUY from HOLD and raised its target price to 83 sen from 69 sen, citing stronger busduct deliveries, a rapidly expanding orderbook and narrowing losses in its high-voltage (HV) segment.
The research house turned more positive on EITA following a meeting with management, saying growth should be supported by rising demand for busduct systems for regional data centre projects in Johor and Indonesia.
EITA returned to profitability in 3QFY26, posting core profit after tax and minority interests (PATMI) of RM7.2 million compared with a core net loss of RM400,000 a year earlier.
The improvement was driven partly by a turnaround in its manufacturing division, which recorded profit before tax of RM2.4 million, against a RM3 million loss before tax in 3QFY25. Earnings from its marketing and distribution and services divisions also improved, while losses at its HV systems business narrowed.
For the nine months of FY26, however, core PATMI stood at RM11.5 million, 7.6% lower year-on-year from RM12.4 million.
M+ Global expects the group to finish FY26 on a stronger footing as busduct deliveries for data centre projects accelerate and losses from the HV business decline.
Busduct Deliveries Drive Manufacturing Recovery
EITA’s manufacturing division recorded a RM4.5 million quarter-on-quarter swing into profitability in 3QFY26, reporting RM2.4 million in pre-tax profit compared with a RM2.1 million loss in the preceding quarter.
Revenue from the segment jumped 66.9% quarter-on-quarter, mainly driven by busduct deliveries for an Indonesian data centre project.
Management expects an even stronger performance in 4QFY26 as both its Indonesia and Johor busduct projects contribute concurrently, with momentum expected to continue into the first half of FY27.
M+ Global said EITA’s exposure to regional data centre infrastructure is becoming an increasingly important growth driver for the group.
Orderbook Could Reach RM1 Billion By End-2026
The research house said management expects EITA’s total outstanding orderbook to reach RM1 billion by the end of 2026, more than double the RM423.9 million recorded as at June 30.
The increase is expected to be supported by new orders across its various business segments, giving the group improved multi-year earnings visibility.
M+ Global also highlighted EITA’s RM221 million SESCO Mapai project in Sarawak, which commenced on Sept 7 and has a 25-month execution period.
The project, undertaken by EITA’s 60%-owned TransSystem Continental, is expected to carry a gross profit margin of around 13%, translating into an estimated RM17.2 million gross profit contribution to EITA.
The project marks the group’s maiden 500kV substation project in Sarawak, with management expecting further tender opportunities in 2027.
HV Losses Expected To Narrow
M+ Global said EITA’s HV segment is expected to remain loss-making in FY27, although losses should narrow substantially as project execution accelerates.
The division is targeted to reach operational breakeven in FY28.
The research house said this could also reduce unabsorbed tax losses and help normalise EITA’s relatively high effective tax rate, improving the conversion of operating earnings into bottom-line profit.
Following stronger busduct execution and expectations of lower HV losses, M+ Global raised its FY26-FY28 core PATMI forecasts by 24.2%, 14.5% and 16.5% respectively.
Its revised earnings forecasts stand at RM19 million for FY26, RM22.9 million for FY27 and RM25.4 million for FY28, compared with RM15.3 million, RM20 million and RM21.8 million previously.
The new 83 sen target price is based on a price-to-earnings multiple of 11 times applied to M+ Global’s revised FY27 earnings per share forecast of 7.57 sen.
