Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 20): Muhibbah Engineering (M) Bhd may see its profit jumps 20%-30% in FY15 if it clinches the RM500 million contract for the refinery and petrochemical integrated development (RAPID) project in Johor, analysts say.

The Edge Malaysia, quoting sources, had said in this week’s publication (Oct 20-Oct 26) that Muhibbah is in the last stage of negotiations with Técnicas Reunidas SA on the RM500 million contract for civil and mechanical works and fabrication in the RAPID project.

Today, a research analyst told TheEdge Markets.com that “the news exceeded our expectation of contract worth of about RM300 million to RM350 million”.

He expects Muhibbah to clinch one or two more sub-contracts, noting that the firm has sufficient fabrication capacity and yard space.

Meanwhile, CIMB Investment Bank Research has raised its target price to RM3.89 from RM3.88 for Muhibbah, with an "add" call retained for the stock.

In a note today, the research house said the news is "positive" but "not too surprising" given it had expectations on the group’s prospects in RAPID.

“If this materialises, it will bring the group's infrastructure order book to over RM1 billion and its total group order book (cranes and shipyard) to around RM2.5 billion,” said Sharizan Rosely, research analyst at CIMB IB.

“We expect Muhibbah to also be in the running to secure other specialised job packages from other foreign engineering, procurement and construction players there,” he added.

As at 3.10 pm today, Muhibbah gained 13 sen or 4.6% to RM2.95 on some 1.4 million shares done, giving it a market capitalisation of RM1.258 billion. The stock had earlier hit a high of RM2.96.

 

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