Muhibbah dn after Asia Petroleum Hub falls into receivership
Date:
2011-06-16
Firm:
CIMB
Stock:
Price Target:
2.75
Price Call:
BUY
Last Price:
0.85
Upside/Downside:
+1.90 (223.53%)
KUALA LUMPUR: Shares of Muhibbah Engineering Bhd fell in early trade on Thursday, June 16 after Asia Petroleum Hub (APH), the developer and operator of the APH oil terminal in Johor, was placed under receivership.
As one of the contractors for APH, Muhibbah was awarded the marine piling and jetty works worth RM820 million.
At 9.27am, Muhibbah was down six sen to RM1.84 with 2.50 million shares done.
The FBM KLCI fell 2.59 points to 1,553.60. Turnover was 81.31 million shares valued at RM75.08 million. There were 54 gainers, 187 losers and 154 stocks unchanged.
CIMB Research said the receivership status for the APH project was a negative surprise. However, it should not be a major concern at this juncture as APH is likely to negotiate for more time to resolve the matter and rope in a new investor.
'The worst-case scenario for Muhibbah is a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11. However, there is no impact on RNAV as the amount is reflected as liabilities.
'As we view a write-down as remote at this juncture, we maintain our forecasts and RM2.75 target price, which is pegged to an unchanged 10% discount to RNAV,' it said.
As one of the contractors for APH, Muhibbah was awarded the marine piling and jetty works worth RM820 million.
At 9.27am, Muhibbah was down six sen to RM1.84 with 2.50 million shares done.
The FBM KLCI fell 2.59 points to 1,553.60. Turnover was 81.31 million shares valued at RM75.08 million. There were 54 gainers, 187 losers and 154 stocks unchanged.
CIMB Research said the receivership status for the APH project was a negative surprise. However, it should not be a major concern at this juncture as APH is likely to negotiate for more time to resolve the matter and rope in a new investor.
'The worst-case scenario for Muhibbah is a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11. However, there is no impact on RNAV as the amount is reflected as liabilities.
'As we view a write-down as remote at this juncture, we maintain our forecasts and RM2.75 target price, which is pegged to an unchanged 10% discount to RNAV,' it said.
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CS Tan
4.9 / 5.0
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....
valueinvestor
why invest hard earned monies in big plc whose balance sheets are too big to be analysed correctly or even many research houses and audit firms may not or do not bother or do not know how to ascertain the quality of their huge receivables and other assets in the balance sheet like Muhibbah?
Wouldn't their bankers now start thinking whether the 'umbrellas' can still be extended? Besides profit, how about the cash flow for next 12 months? Hence, more uncertainties can be delevoped from now onwards.
It will be safer to invest in companies like Mitrajaya or Ken Holding which have lesser receivables or collection risk although they are smaller outfits. Their balance sheets are much smaller but the quality of their assets can be analysed or ascertained more correctly ourselves.
'Small can be beautiful and safe' :-)
2011-06-17 08:07