SHAH ALAM (June 24): Muhibbah Engineering (M) Bhd expects a 15% success rate on its project bids this year, which stand at about RM3 billion to RM5 billion to date, according to its deputy chief executive officer Mac Chung Jin.
"The total tender packages are about RM3-5billion, single value contracts at the moment ranging between RM100 million per single package up to RM1 billion," Chung Jin told reporters after the annual general meeting (AGM) here today.
"We expect a 15% success rate, but we can't tell whether it is 15% of our bids for 50-60 projects or 15% of the total bidding value," he added.
Chung Jin said the company is also bidding for a few packages from Petroliam Nasional Bhd (Petronas)’s RM53 billion Refinery and Petrochemical Integrated Development (RAPID) project, as well as Petronas’ projects in East Malaysia.
The company’s order book now stands at about RM2 billion, which he said should last the company for about one and a half years to two years.
Chung Jin said the company is optimistic of securing the contracts, since generally, tenders for oil and gas contracts are less in numbers as compared to construction tenders.
Last week, Muhibbah announced it had secured RM60.3 million worth of jobs via its subsidiary Muhibbah Airline Support Industries Sdn Bhd. Year-to-date, the company has replenished approximately RM245.9 million worth of contracts.
Muhibbah's group managing director Mac Ngan Boon said the group has always been able to maintain its order book of RM4 billion to RM5 billion.
"We have always been able to maintain our order book, but we don't want to be too competitive, because of the potential inflation — we are concerned about the inflation in [the] construction sector, but we are still optimistic," said Ngan Boon.
On whether Muhibbah fears any payment delay by Petronas, Ngan Boon said this is part of the risk in the construction sector, but added he did not see Petronas to unreasonably delay its payment.
Apart from focusing on its four key divisions (construction and engineering, crane, shipyard and airport concession), Ngan Boon did not dismiss the possibility of the company diversifying into other "interesting" businesses.
However, he declined to elaborate on what sector Muhibbah is eyeing.
Muhibbah (fundamental: 1.1; valuation: 0.8) closed 4 sen or 1.73% lower at RM2.27 today, giving it a market capitalisation of RM1.07 billion.
(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)