Kawan Renergy: Earnings came in below expectations

Kawan Renergy (KENERGY) reported a core PATAMI of RM4.4m in 1QFY26, declining by 25.9% QoQ and 5.6% YoY. This was primarily driven by margin compression, which more than offset stronger revenue recognition (+4.0% QoQ, +51.3% YoY), reflecting an unfavourable project mix.

Kawan Renergy

Overall, earnings came in below expectations, accounting for only 17.7% and 16.0% of our and consensus full-year forecasts respectively. Orderbook visibility weakened, declining to RM86.8m (vs. RM108.2m in 4QFY25), due to the lack of meaningful contract wins since October 2025.

“We view this slower replenishment trend negatively, as it raises execution and earnings visibility risks heading into FY26F, particularly given the project-based revenue model. Hence, we cut our FY26–FY28F earnings forecasts by 30%/26%/28% after lowering our orderbook replenishment assumptions by RM50m per annum.

“Despite this, we maintain our Outperform call, albeit with a lower TP of RM0.54 (from RM0.76), based on 16.3x CY26F EPS of 3.29 sen, as we continue to see longer-term upside from its engineering capabilities and renewable energy exposure,” says Public Investment bank.

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