RHB Research has downgraded UUE Holdings Bhd to Neutral from Buy despite raising its target price to 80 sen from 70 sen, following the company’s latest RM29.8 million contract wins in Singapore.
The revised target price represents a potential upside of 6%. RHB said the downgrade reflects limited near-term upside after UUE’s share price gained 43% year-to-date, with much of the anticipated positive developments already reflected in its valuation.
In its latest research report, RHB said UUE’s wholly-owned subsidiary, Konnection Engineering, secured four subcontracts worth SGD9.3 million (RM29.8 million) from Wee Guan Construction for SP PowerAssets’ 400kV power cable works.
The contracts primarily involve installing high-density polyethylene pipes through horizontal directional drilling (HDD).
Approximately 72% of the contract value, equivalent to SGD6.7 million, is scheduled for completion by December 2027, with the remaining works due by December 2028.
RHB noted that Singapore contracts typically generate gross profit margins of 30% to 35%, compared with 15% to 20% for Tenaga Nasional-related projects.
The latest awards lifted UUE’s contract wins for FY2027, ending February, to RM127.9 million, representing about 40% of RHB’s full-year replenishment target of RM320 million.
The research house maintained its replenishment assumption, citing an existing tender pipeline involving SP PowerAssets, Tenaga Nasional and private-sector projects.
RHB also expects UUE to deliver a compound annual earnings growth rate of 28% between FY2026 and FY2029, supported by its contract pipeline and higher-margin Singapore operations.
It adjusted its FY2027–FY2029 earnings forecasts slightly to reflect the latest contract wins and revised billing assumptions.
The new 80 sen target price is based on 21 times fully diluted calendar-year 2027 earnings, up from 18.2 times previously, reflecting a reinstated 15% valuation premium to peers.
RHB identified slower contract replenishment, delays in permit approvals and higher raw material costs as key downside risks.
