CBH Engineering Downgraded to HOLD as Slower Revenue Recognition Hits Earnings Outlook

CBH Engineering Holding Berhad’s latest results indicate material execution delays, with 9MFY25 core net profit of RM21.6m reaching only half of full-year expectations. The shortfall stems from slower-than-expected revenue recognition across ongoing mechanical and electrical projects, particularly those still stuck in early design phases. Third-quarter earnings fell sharply quarter-on-quarter and year-on-year, although margins improved through a more favourable mix of higher-margin data-centre substation work.

CBH Engineering

The revised outlook signals heavier reliance on FY26–FY27 for earnings recovery. A larger share of the RM532.3m order book is now expected to spill into later periods, reducing FY25 visibility. Analysts cut earnings forecasts by up to 28% for FY25–FY27 and slashed FY26 order-book replenishment assumptions to RM204m, citing strained resources tied to large contract execution. While the tender pipeline remains healthy, especially in data-centre infrastructure, meaningful upside depends on CBHB’s ability to accelerate project mobilisation without operational bottlenecks.

The target price has been reduced to RM0.47 based on 18x FY26 earnings, and the stock has been downgraded to HOLD. Sustained re-rating will hinge on improved delivery momentum and stronger contract wins.

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