UUE's RM515mil orderbook seen set to grow from TNB, data centre boosts

KUALA LUMPUR: UUE Holdings Bhd's record RM700 million tenderbook could expand further as project call-ups from Tenaga Nasional Bhd (TNB), data centres (DCs) and solar projects gather pace.

Hong Leong Investment Bank Bhd (HLIB) said UUE should benefit from rising demand for specialised underground utility works, particularly as major mechanical and electrical (M&E) contractors increasingly focus on higher-value substation packages.

"Higher-voltage connections should bring larger contracts, while M&E contractors' focus on substation packages should channel more specialised underground works to UUE," it said in a report.

UUE's tenderbook stands at RM700 million, alongside an orderbook of RM515 million, equivalent to 2.4 times its financial year 2026 (FY26) revenue.

HLIB Research said discussions with M&E contractors and TNB indicated more projects could come to market in 2027 and 2028, providing further room for the tenderbook to expand.

With UUE's historical tender conversion rate of 20 per cent to 30 per cent, the growing pipeline should support further orderbook growth.

"Nearer term, we expect stronger quarter-on-quarter earnings in the coming quarter on better contributions from Malaysia and Singapore, with the latter benefiting from all 10 teams deployed since June, up from seven in the first quarter of 2026," it said.

HLIB said TNB's 1+1 bulk orders would provide an earnings base, while one-off projects should drive orderbook growth.

It expects project call-ups to become more prominent in the second half of 2026 and 2027 as TNB rolls out transmission projects and five gigawatts of newly approved data centre capacity progresses towards Energy Supply Agreement signings.

"With upcoming TNB works concentrated in 132 kilovolts (kV) to 275kV infrastructure, contract values should also rise.

"The same applies to DCs, where new DCs today typically require connections of at least 132kV," it said.

On solar, HLIB expects the Corporate Renewable Energy Supply Scheme to create more opportunities, particularly as projects serving power-hungry DCs could require larger 132kV to 275kV interconnections.

"UUE therefore stands to benefit in two ways: more jobs and larger contracts," it said.

HLIB Research raised its FY27-FY29 project win assumptions to RM200 million annually and lifted earnings forecasts by three per cent, seven per cent and four per cent respectively.

It maintained its "Buy" call on UUE and raised its target price to RM1 from 85 sen.