Kinergy's RM47.5mil data centre contract to add RM1.4mil to net profit

KUALA LUMPUR: Kinergy Advancement Bhd's RM47.5 million data centre contract is expected to contribute RM1.4 million to its net profit over the financial years ending 2026 (FY26) to FY28, said RHB Research.

The research firm said the contract involves core and shell electrical infrastructure works for a data centre, with Kinergy Advancement expected to commence work by year-end and complete the project in the first quarter (Q1) of 2028.

"Assuming a three per cent margin, we estimate that the project will contribute RM1.4 million net profit over FY26 to FY28, with the bulk of recognition in FY27.

"Hence, we expect the job to make up two per cent and one per cent of our FY27 to FY28 earnings, respectively," the firm said in a note.

With the latest win, RHB Research estimated that the Kinergy Advancement has an outstanding order book of RM1.1 billion, which should sustain the company's revenue for 2.5 years.

The research house maintained its "Buy" call on the stock with a target price of 60 sen, noting that the contract falls within its RM60 million new orderbook replenishment target for the engineering division.

"As the award is within our RM60 million new orderbook replenishment target for the engineering division, we make no changes to our numbers.

"We also do not discount it, securing more data centre-related jobs in the future," it added.