Muhibbah still boasts active construction pipeline amid Petronas-Petros issue
KUALA LUMPUR: Muhibbah Engineering (M) Bhd has maintained an active construction pipeline despite short-term uncertainties linked to the ongoing Petronas-Petroleum Sarawak (Petros) dispute, CIMB Securities said.
The company's current bid book stands at RM2.6 billion, with 62 per cent of projects located overseas.
Its infrastructure jobs account for 50 per cent of the bids, followed by waste-heat energy projects at 38 per cent, and oil and gas-related works making up the remaining 12 per cent.
"Muhibbah's 65 per cent-owned subsidiary Favelle Favc is bidding for RM3 billion worth of jobs, with the Middle East region accounting for over RM100 million as massive infrastructure projects such as the New Murabba mixed-use development and the NEOM 2029 Asian Winter Games are fuelling new orders for cranes," it said.
According to CIMB Securities, Muhibbah's first quarter of 2025 (1Q25) performance was in line with expectations, with core earnings making up 26 per cent of both its and market consensus estimates.
The company posted a 14 per cent year-on-year (YoY) increase in net profit to RM16.17 million, up from RM14.19 million previously, driven by stronger contributions from its concession segment.
"As with previous financial years, Muhibbah's 21 per cent-owned Cambodia Airports continues to be the key 1Q earnings driver for the group in financial year 2025 (FY25).
"This is underpinned by a 22 per cent YoY surge in Cambodian air traffic as the kingdom continues to benefit from a resurgence in the number of tourist arrivals," it said.
CIMB Securities expects Muhibbah to declare a total dividend per share of 2.3 sen for FY25, offering a fairly attractive yield of 3.8 per cent.
The research house remains positive on Muhibbah due to its involvement in marine and oil and gas-related infrastructure projects.
It maintained a 'Buy' rating on the stock with an unchanged target price of RM1.10.
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