Powerwell Holdings Bhd has received a bullish call from Apex Securities, with a target price of RM1.10 and a “buy” recommendation, citing the company’s unique position in the data centre investment upcycle in Malaysia.
The positive outlook is driven by Powerwell’s capacity expansion in regional branches and its recent acquisition of Tenaga Kenari, which offers a significant uplift to the company’s core net profit.
Data Centre Investment Upcycle
According to the report, Malaysia’s data centre capacity is set to nearly triple by 2030, implying a RM128-162 billion addressable M&E market, where Powerwell is the only Malaysian manufacturer licensed across both Siemens LV and MV ranges.
Apex Securities notes that Powerwell’s strength comes from its proprietary brand, which can be fully customized to each customer’s requirement, making it a top choice for data centre construction projects.
Data centres already make up 35% of the company’s RM150 million order book and 73% of its RM410 million tender pipeline, highlighting the company’s growing presence in the sector.
The ability to customize products to meet specific customer needs is particularly valuable in the data centre industry, where complexity and specialization are increasingly important.
Furthermore, the focus on renewable energy needs in data centre construction plays to Powerwell’s strengths, as the company is well-positioned to capture the demand growth from Malaysia’s data centre construction boom.
Financial Performance
Powerwell’s core net profit rose to over RM24 million in FY2026, signifying a 15% growth year-on-year, and becoming the first time the company has ever cleared the RM20 million line.
RHB views this progression as structural rather than one-off, expecting the company’s profits to grow continuously, with an annual compounding rate of 45.7% to eventually arrive at RM51 million in FY2028.
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The company’s healthy cash generation, increased dividend payout, and bonus issue announcement highlight management’s confidence in the sustainability of future earnings.
In addition, the expansion of output capacity through Indonesian and Sarawak counterparts, coupled with ongoing process automation initiatives, will enable Powerwell to scale into larger, higher-value projects in the future.
This strategic expansion will not only increase the company’s revenue but also enhance its competitiveness in the market, allowing it to capitalize on the growing demand for data centre construction services.
Risks and Challenges
However, Apex Securities have also noted a few key risks, including slower artificial intelligence infrastructure investments, delays in hyperscale developments, and regulatory changes affecting data centre developments.
Despite these risks, Powerwell’s plans to expand output capacity and automate processes are expected to allow the company to scale into larger, higher-value projects in the future.
The company’s ability to capture the demand growth from Malaysia’s data centre construction boom will be key in driving its future growth and profitability.
Moreover, the acquisition of Tenaga Kenari provides Powerwell with its first East Malaysia manufacturing base and an established relationship with Sarawak Energy Bhd, further strengthening its position in the market.
With a strong foundation in place, Powerwell is well-positioned to handle the challenges and risks associated with the data centre industry, and to capitalize on the opportunities presented by the growing demand for data centre construction services in Malaysia.
