The group's RM2bn-3bn total value of bids for Petronas's Rapid project and the targeted 20-30% success rate over the next 12 months remain intact. We believe the group could land 1-2 smaller-/medium-sized packages before year-end as most awards are due from 2H onwards. The appeal is Muhibbah's exposure to oil & gas infrastructure (c.60% of order book) including Petronas's steel fabrication jobs. The positive outlook reflected in the surge in share price YTD still does not fully reflect these prospects. We raise our target price as we apply a lower RNAV discount of 20% (30% before). Maintain Add. Significant upside potential for infra order book Several job awards from the Rapid projects for contractors have materialised YTD. We expect more awards to come through from 2H and expect Muhibbah to secure 1-2 smaller- and medium- sized packages as the group's RM2bn-3bn tender book focuses more on the oil & gas infra/marine infra segment. Potential contract wins in the months ahead should provide significant upside to the group's infra segment's order book of RM759m, which makes up 41% of total group order book of RM1.9bn (including cranes and shipyard). More than 60% of the total outstanding order book is oil & gas related. The group has the capacity to double its order book. We expect potential pretax margins for Muhibbah to be higher than the typical 4-5% for civil works’ tenders and should drive an increase in the group’s infra margin from the 3-4% in the past several quarters. This implies upside to our numbers. Steel fabrication jobs Other key drivers to the order book, apart from Rapid, are the potential job flows arising from the Offshore Facilities Construction - Major Onshore Fabrication licence from Petronas. A big endorsement for Muhibbah's steel fabrication capabilities was the audit and recognition by Petronas of the group's 57-acre site in Teluk Gong, which has a capacity of 25k MT p.a. The recent RM30m maiden award for a central processing platform (CPP) was a good start. Steep discount to RNAV YTD, the share price has surged 38%, mainly due to the group's recovery story, driven by Rapid and a recovery in interest from foreign investors. Foreign shareholding stands at 23%, up from 18% in May 14 and more than double the levels in 2H13. The stock trades at a 35% discount to RNAV.
hope it does not do a 6 month consolidation like jul-dec2013.May have earnings surprise(+ve) for june14.Good time to bargain hunt if you believe fundamentals intact.
Don't be stupid... The counter dived so much dy... its a real challenge trying to break-even from last mth... no nonsense announcement tat the mkt hasn't sense out b4...
ktjaven. Just a stupid opinion, Buying Muhibah at dip is great opportunity for long term profit considering catalyst after catalyst seems never end, Turnaround of operating margin, ROE, net profit mrgin, current ratio (2012 vs 2013 are good indication. Furthermore, positive EPS growth rate are evidenced since 2013 till now and possibly continue. To me, market will sense eventually. Today seems rebound. Only God Knows.
Wxgwxw, pls embrace reality... so wat when there's catalyst after catalyst to which price is not responsive & reflective?? Runnnnnnnnn when u can... another 10sen drop today... muhibah going to hell, wake up from ur delusion...
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
robot99
243 posts
Posted by robot99 > 2014-07-08 14:37 | Report Abuse
Muhibah lai liao,,,,,,