Singaporean Data Centre supplier at <7 P/E, up 20% after its AGM

XMH Holdings (BQF.SI) AGM update

[Edit: This was previously a paid post but I have now made the notes below the divider free. If you would like to quickly get up to speed on this company or other undiscovered companies, sign up to a paid subscription and get in touch.]

I posted a short roundup on X but my full notes are below. My approach to research is to perform obsessive ground level research on undiscovered and undervalued companies.

XMH Holdings Ltd is a Singaporean company that supplies engines to the marine industry and diesel gensets to buildings (notably, data centres) in South-East Asia.

The 2025 Annual Report revealed that XMH was successfully selling diesel gensets (~ $50 million) to Malaysia, one of the fastest growing data centre markets in APAC. Many companies with data centre exposure are trading at 10+ P/E.

I attended the AGM because the subsidiary that supplies gensets, Mech-Power, used to be a leading supplier, with blue chip data centre customers and gensets at major buildings and infrastructure projects in Singapore and around the world: see archived page. Mech-Power was much less prolific after it was acquired by XMH in 2013 and I was surprised that it was only getting attention for its data centre business again in 2025.

What happened to Mech-Power and how did it jump start this business? How much revenue can it generate from data centre customers going forward? What about the marine business? Why did the stock pop after the AGM?

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The AGM

• Management struck me as conservative and quietly confident in the company. One of the independent directors spoke highly of the desire to underpromise and overdeliver.

• Some shareholders aiming for mid teens p/e. FWIW, mid teens would put it in the league of Daihatsu Diesel.

• A few longtime shareholders in attendance, jokingly trying to buy shares off other attendees. There was one analyst in attendance, the head of research for a local bank, notable because the company is not currently covered by analysts.

  • I believe both of these points drove the pop on AGM day.

• Management credited its data centre success to being able to secure and stock gensets from a supplier as a result of its strong relationship from the marine side of the business. I inferred that this supplier was Mitsubishi.

• There were pictures of the Mech-Power facility in Johor. According to a dated 2014 article, this is a 150k sq ft facility capable of producing S$ 40 to 50 million in gensets.

• Management says the constraints are labour and the requirement to meet tight lead times demanded by customers. To illustrate, a data centre might need 30 gensets in 12 months - that can be a challenge depending on what they are already working on.

• They are addresses these challenges by subcontracting, currently up to 10% of the value of the work and on lower value work.

• There was discussion of expanding the Johor facility but no details were provided.

• We know they can generate at least S$50 mil from the Johor facility. Optimistically, by subcontracting and getting higher margin projects, they might grow this number.

• They have S$20-30 mil in finished goods, S$40 mil stockpiled for future work, and orders that cover the entire inventory. The entire order book was S$190million as of July 2025.

• A change in policy from the Johor state government about the rapid data centre buildout and its impact on water and electricity supply was an acknowledged risk but management was confident that the data centres would move elsewhere in SE Asia that it could address, such as Kuala Lumpur, Indonesia, Thailand, and Philippines.

• Other than data centres, there are enquiries from other types of projects, notably wind farms.

• Marine Business

  • Management says the marine business is chugging along, defying expectations of a slowdown in Indonesia. Indeed, consistent with that update, tugboat demand seems to be quite healthy globally, and Indonesian orders continue to come in.

  • Instability in the Philippines was seen by one employee to be holding back growth in that country.

• After Sales

  • The diesel genset sales should translate to recurring maintenance revenue. Management says they should be serviced 2x a year and should represent a growing, but still small, part of the business.

• FWIW, a shareholder observed that the building we were in was valued in 2020 at >S$80 million. This was discussed in the 2024 AGM.

What happened to Mech-Power in the 2010s?

• Did not get clear answers from management and shareholders on this. My best guesses are:

  • The genset business is highly dependent on a strong relationship with a supplier that can satisfy specs required for a project. That relationship was renewed / expanded in 2023/2024 because of the strong performance in the marine business.

  • Management was distracted with new acquisitions that bled the company for a while. They seem to have put this era behind them and are focused on the data centre opportunity ahead.

What does the future look like?

• Most people think XMH is a marine business. I believe the fact that this is also data centre play is under-appreciated.

• It is in the backyard of the fastest growing data centre market in APAC - Johor.

• The data centre business is built on a strong relationship with a supplier and credit has to be given to management for expanding that relationship and securing the supply necessary to address this market.

• On quite conservative estimates, and a pessimistic view of the marine market, one might argue the company is fairly valued. However, with patient insiders and long time shareholders, any positive media coverage could trigger a big move up in this illiquid stock.

Disclaimer: I have a small position in XMH Holdings. This is not a recommendation to buy or sell stocks. These are my personal notes from research derived from sources that I believe to be reliable. There is no representation as to the accuracy or completeness of the research. The information contained in this publication is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in here are my own and are subject to change without notice.