KLSE INVESTORS CLUB wrote a note · Aug 16 08:22

HEGROUP Poised Sustained Growth in Coming QR.

$HEGROUP (0296.MY)$ is poised for sustained growth in the second quarter of 2024 (2Q24) with further improvement in 3Q24.

The research house said in a note to clients the strong earnings momentum is expected to be bolstered by the mechanical and electrical engineering group’s RM180mil order book, which is expected to be fully recognised in 2024

It added a stronger sequential 3Q24 would be driven by the recognition of a short-turnaround electrical equipment hook-up project valued at RM20mil.

The project is expected to offer $HEGROUP (0296.MY)$ a significantly higher project margin of 24% to 26% compared with the group’s blended average of 11% to 15%.
Additionally, $HEGROUP (0296.MY)$ expects more potential work from new semiconductor and data centre projects in the coming months as the two segments remain its major drivers.

$HEGROUP (0296.MY)$ currently has a tender book of RM810mil, nearly double the RM440mil recorded in 1Q24. Of the total tender book, semiconductor and data centre projects accounted for 48% and 47%, respectively.
An increase was recorded for data centre-related tenders from 20% to 47%, and Phillip Capital Research points out that this reflects a positive outlook for HE Group, which remained focus on expanding in the sector.

$HEGROUP (0296.MY)$

Support Price : 0.55
“Phillip Capital Research has maintained a “buy” call with a target price of 90 cents.

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