Muhibbah Engineering

Muhibbah Engineering

Postby sschong92 » Mon Nov 17, 2014 11:21 am

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Muhibbah close to getting RM500m RAPID job

By Fatin Rasyiqah Mustaza

Nov 13, 2014

MUHIBBAH ENGINEERING (M) BHD ( Financial Dashboard) is in the last stage of negotiations with Técnicas Reunidas SA on a RM500 million contract for civil and mechanical works and fabrication in Petroliam Nasional Bhd’s refinery and petrochemical integrated development (RAPID) project within the Pengerang Integrated Complex in Johor, industry sources say.

The Edge understands that the contract is a part of the Spanish company’s RM4 billion engineering, procurement, construction and commissioning (EPCC) job in the refinery and steam cracker component of RAPID that was awarded in August this year.

“If all goes well, Muhibbah could seal part of the EPCC job before year-end,” a source says.

There are scant details of the potential award by Técnicas Reunidas but the contract could nudge Muhibbah’s order book to an all-time high of almost RM2.5 billion.

According to Kenanga Research, Muhibbah’s outstanding order book stands at RM1.93 billion, comprising RM875 million from construction, RM1.02 billion from its crane division (Favelle Favco Bhd ( Financial Dashboard)) and RM38 million from its shipyard division. This will keep the group busy until 2016.

Kenanga, which has a “buy” recommendation on the group, says Muhibbah’s year-to-date contract wins amount to RM378 million or 54% of its financial year 2014 (FY2014) new jobs assumption of RM700 million. “We reiterate our view that the remaining RM300 million to RM500 million new jobs will be secured by the group before end-FY2014, likely from oil and gas, that is Petronas-related projects such as RAPID.”

This indicates that the award of the EPCC contract by Técnicas Reunidas is not entirely unexpected.

In its notes accompanying its financial results for the first half of this year, Muhibbah says, “The group, with its experience and track record in the oil and gas sector, is hopeful of securing some of the related oil and gas engineering and construction works from RAPID.”

It is worth noting that Muhibbah has bulked up its order book with several contracts secured this year. Last month, it won a RM157 million job for the design, construction and completion of Phase 1 of the conveyor system facility for the proposed Samalaju Port project in Bintulu, Sarawak, from Bintulu Port Holdings Bhd ( Financial Dashboard).

Also in September, the company was awarded a two-year, RM100 million contract for the construction, fabrication and installation of the new Aroma Chemical Complex along with relevant facilities for the Lemongrass project in Kuantan, Pahang, by BASF Petronas Chemicals Sdn Bhd.

In August, Muhibbah got a RM30 million contract for the fabrication, loadout and seafastening of jackets, piles and appurtenances for a central processing platform to be installed on Vestigo’s Tembikai oilfield off the peninsula.

In May, it bagged from Samsung Engineering (M) Sdn Bhd the RM61.4 million civil and building works for the Terengganu Gas Terminal project. A few months before that, it was awarded a RM30 million steel structure erection job by JGC (M) Sdn Bhd for Petronas’ LNG Train 9 project in Bintulu.

Interestingly enough, Muhibbah may be involved in the fabrication aspect of the RAPID contract. In June last year, Petronas licensed it as an approved supplier for “offshore facilities construction-major onshore fabrication”.

The licence has put Muhibbah on a whole new level as it can now bid for and participate in construction and fabrication works for Petronas and other major oil companies in the country, which augurs well for its earnings.

For the first half of FY2014 ended June 30, Muhibbah registered a net profit of RM41.1 million on revenue of RM860.1 million. A year ago, net profit was flat at RM40.5 million, although revenue rose 8.4% from the previous corresponding period.

Kenanga estimates Muhibbah’s FY2014 net profit at RM87.4 million and revenue at RM1.62 billion, and has a target price of RM3.55 for the company, which implies a forward price-earnings ratio (PER) of 14.6 times FY2015 earnings. This is still within its mid-sized construction peers’ historical PER of 12 to 15 times.

Muhibbah has not been spared the effects of the recent turbulence in the global stock markets and has been spiralling down like other oil and gas stocks. Since hitting its 52-week high of RM3.43 in July this year, Muhibbah’s shares have fallen 19.8%. The counter closed at RM2.75 last Thursday.

Says Kenanga, “We continue to like Muhibbah for its unique business structure that offers flexibility in infrastructure, marine engineering and oil and gas jobs, the ability to leverage its internationally recognised Favelle Favco name and long-term earnings visibility backed by stable and growing recurring income from its concessions.”

Source: The Edge
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Re: Muhibbah Engineering

Postby winston » Mon Nov 17, 2014 4:38 pm

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Muhibbah falls 18% after co not named Petronas regasification contract winner

KUALA LUMPUR (Nov 17): Muhibbah Engineering Bhd ( Financial Dashboard) fell as much as 18%, after the firm was not named as the builder for Petroliam Nasional Bhd's (Petronas) planned RM2.7 billion regasification facilities.

Muhibbah fell as much as 45 sen to RM2.11 before reducing losses. At about 3.45pm, the stock was traded at RM2.28.

Muhibbah was the most-active counter with some 38 million shares changing hands.

An oil and gas analyst told the theedgemarkets.com that the drop in Muhibbah's share price was due to "confusion" over the winning party for the regasification facilities contract given out by Petronas.

“It did not go to Muhibbah, but they did not mention that they were bidding to begin with.

“They are concentrating on other parts of Pengerang, Johor – the construction of refinery and petrochemical facilities instead,” he told theedgemarkets.com over the telephone.

According to the analyst, Muhibbah's share price drop might also be due to a “prominent” fund management company selling its stake across its O&G holdings.

Last Friday, Dialog Group Bhd ( Financial Dashboard) said it had signed a shareholders’ agreement with Petronas Gas Bhd to undertake the regasification project.

The project comprises a a regasification unit and two liquefied natural gas storage tanks.

Today, Dialog rose as much as three sen or 2% to RM1.59 before erasing gains.

The stock changed hands at RM1.52 at about 3.50pm.

Source: The Edge
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Re: Muhibbah Engineering

Postby winston » Mon Nov 17, 2014 7:08 pm

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Muhibbah Engineering falls to Sept 2013 low

KUALA LUMPUR: Muhibbah Engineering (M) Bhd’s share price fell to an intra-day low of RM2.11, the lowest since September 2013, tracking the decline of the big capitalised oil and gas counters as oil prices continue to retreat but CIMB Equities Research said the selling was overdone.

At 3.53pm, it was down 31 sen to RM2.25 – a far cry from its peak of RM3.48 in July. There were 39.01 million shares done at prices ranging from RM2.11 to RM2.56.

The FBM KLCI fell 2.27 points or 0.13% to 1,811.52. Turnover was 1.03 billion shares valued at RM910.09mil. There were 234 gainers, 479 losers and 301 counters unchanged.

At around the current level, Muhibbah is trading at a price-to-earnings of 11.15 times and its return on equity is 15.58%.

US light crude oil fell 76 cents to US$75.04 while Brent fell US$1.05 to US$78.36.

In late October, analysts were positive on the outlook of Muhibbah as news flow could be active going into the year-end and 2015.

Analysts said the group's fundamentals remain unchanged and expected the stock to continue to re-rate in the short term as it was set to secure more projects.

Of the five research houses covering the company, three have a Buy call while one has a Hold and the other a Sell. The target price is RM3.51.

Source: The Star
CIMB Equities Research said on Monday the award of the regas plant in Pengerang to Samsung should not be viewed as negative for Muhibbah given that it did not bid for it.

“Also, the risk of delays in oil & gas infra projects in RAPID has been overplayed, in our view. Lower oil prices are negative for upstream players but net positive for downstream contractors like Muhibbah as construction costs are lower.

“Our EPS forecasts are intact but we cut our target price (still based on a 20% RNAV discount) as we update for Favelle Favco's lower market cap.

“We view today’s 11% fall in Muhibbah’s share price as a buying opportunity. The stock now trades at an undemanding FY15-16 P/E of nine to 10 times. Muhibbah remains an Add and our preferred small/mid cap pick, with job wins as a catalyst,” it said.

Source: The Star
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Re: Muhibbah Engineering

Postby winston » Tue Nov 18, 2014 9:59 am

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Muhibbah slumps on weak oil sentiment

PETALING JAYA: Muhibbah Engineering Bhd (MEB) share price took a beating yesterday, falling by more than 10% in heavy trading on worries that slumping crude oil prices will hurt the company's chances of securing oil and gas-related construction contracts.

The stock tumbled 26 sen to RM2.30 with 41.5 million shares traded.

CIMB Research said the selling was overdone and recommended investors to accumulate the stock. It noted that MEB’s foreign shareholding had fallen from a peak of 18% two months ago to about 12% currently.

It said investors should not disregard MEB’s improved infrastructure contract wins year-to-date of RM378mil.

“We were surprised by the selldown, which could have spilled over from investors’ general concern over the impact of the decline in oil prices on upstream pure oil and gas players,” it said.

It noted that the fact that MEB did not benefit from the award of the regassification plant in Pengerang, Johor should not be a major concern as the group did not tender for the job.

The Pengerang project and the Refinery and Petrochemical Integrated Development (Rapid), which is also located in Pengerang, are two different tender areas.

“Management clarified that the group’s tenders in Rapid for more than one refinery subcontract works remain intact. We expect it to land a contract in the short term, worth up to RM500mil based on a recent article in a business weekly. Muhibbah could be in the running for up to about RM1bil worth of projects in Rapid. This excludes new infra tenders in Pengerang which have emerged in the last two-three months,” CIMB said.

The construction and oil and gas (O&G) company has been on a general uptrend, but yesterday’s sell-down wiped out most of its gain year-to-date.

Dealers said MEB was not spared from the selldown as it was perceived to be an O&G as well given its substantial involvement in the industry especially when oil prices weakened.

“Somebody’s selling on redemption and everybody is panicking. It is just a knee-jerk reaction,” a bank-backed analyst said.

Analysts said the situation was a temporary hiccup as some investors were just reacting to the selling. They said it was unlikely that a major sell-down in construction counters would occur while the selldown in O&G counters have already started earlier.

According to sources close to MEB, it is a redemption period for some local funds, taking profit given the bearish view on the sector given the declining oil prices. Funds are re-looking their portfolio and might not want to be in this asset class. “The stock prices have gone up quite a bit early this year, so it not surprising the sharp fall. Moreover, the company has secured a slew of contracts,” the source said.

MEB is involved in the downstream side of the oil and gas sector, providing infrastructure jobs.

Sources close to the company said the redemption would not affect prospects.

MEB currently boost an orderbook of RM2.3bil of which RM875mil are from construction, RM1.2bil from crane and RM257 from shipyard division.

Source: the Star
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Re: Muhibbah Engineering

Postby winston » Wed Nov 19, 2014 11:11 am

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Muhibbah Engineering Bhd
(Nov 18, RM2.25)

Upgrade to buy with a raised target price (TP) of RM3.50: The excessive selldown of the stock was likely due to the perception it did not win the regasification plant contract in the refinery and petrochemical integrated development (Rapid) project. But it did not bid for this contract. Hence, we upgrade the stock to “buy” with a higher TP of RM3.50 based on unchanged 15 times price-earnings ratio (PER) (sector average).

The stock is trading at 10 times financial year 2015 forecast (FY15F) PER on the back of two-year earnings compound annual growth rate of 15%.

Supported by a RM6 billion tender book, there is room for contract wins (excluding Rapid) to surprise on the upside.

We raised FY14F/FY15F/FY16F earnings by 8%/8%/14% after factoring in stronger contract wins of RM600 million for FY14F (vs RM150 million) as we expect a sizeable contract from Rapid by year-end/early 2015. Our job win assumptions for FY15 to FY16F remain at RM1 billion per annum.

With its Petroliam Nasional Bhd licence and marine-based expertise, Muhibbah is poised to clinch a sizeable share of contracts at Rapid. Out of the five Rapid packages, Muhibbah appears to be the strongest contender for civil and fabrication works for Package 3 which was awarded to Technicas Reunidas SA to build a refinery and steam cracker plant.

Muhibbah is also in the running for three other packages as it had worked before with some of the foreign engineering, procurement, construction and commissioning contractors. Assuming a RM500 million win (RM300 million base case, RM1 billion bull case), this would lift the current infrastructure order book to RM1.4 billion (1.4 times FY13 infrastructure revenue). This does not yet include the deepwater jetty worth RM1 billion.

Source: AllianceDBS Research
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Re: Muhibbah Engineering

Postby winston » Sun Nov 30, 2014 7:00 am

Muhibbah: Investors’ reaction misguided

A MISPERCEPTION over the award of a project has cost Muhibbah Engineering Bhd dearly and also given management a big headache. The company’s shares have been sold down, wiping out some RM153mil from its market capitalisation in a week, while senior management of the company scrambled to meet investors and analysts to explain the situation.

The crux of the issue, the management believes, is the difference between the Pengerang project and the Refinery and Petrochemical Integrated Development (Rapid). Both are located in Pengerang but are two different tender areas.

http://www.thestar.com.my/Business/Busi ... ?style=biz
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Re: Muhibbah Engineering

Postby winston » Mon Dec 01, 2014 8:40 am

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Stronger job prospects ahead

Muhibbah's annualised 9M14 core net profit made up 89% of our full-year forecast and 91% of consensus.

The results were broadly in line, as the timing of jobs secured YTD for both infra and cranes should support a better 4Q.

The group has secured RM378m worth of smaller-sized oil & gas-related infra jobs and RM435m worth of crane orders YTD. This excludes the maiden wins from Rapid, which may materialise soon.

Our FY14-16 EPS forecasts are intact, as is our target price, still pegged to a 20% RNAV discount.

The recent decline in share price is a buying opportunity, given the potential re-rating catalysts of job wins.

Maintain Add. Muhibbah is our preferred pick in the small/mid-cap space. It trades at undemanding FY14-16 P/Es of 9-10x.

Source: CIMB

https://brokingrfs.cimb.com/tswdgnWt4nl ... SSf5w1.pdf
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Re: Muhibbah Engineering

Postby winston » Thu Dec 04, 2014 5:34 am

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Muhibbah Engineering secures RM135m Westports project

KUALA LUMPUR: Muhibbah Engineering (M) Bhd has secured a RM135mil contract from Westport Holdings Bhd to build a container terminal at Port Klang.

It said on Wednesday the contract was to build the first 300 metres of container terminal 8 wharf and access bridges and associated works inclusive of Government Service Tax.

Westports has an option within six months from the date of site possession for Part A to award to Muhibbah the second 300 meter of Container Terminal 8 wharf with a total contract value of RM256mil.

Recently, Westport Holdings announced it had embarked on “container terminal 8 expansion plan” to cater for its next phase of growth in view of the increasing container volume and high terminal utilisation rate.

This container terminal 8 expansion plan is to be carried out in two parts. When fully operational, the container handling capacity of Westports will increase from the present 11 million twenty-foot equivalent units (TEU) to 13.8 million TEU.

“Site possession of Part A is scheduled in this month and the contract is expected to be completed within 12 months from the date of site possession. Part B, if awarded will be completed by Q3 of 2016,” it said.

Source: The Star
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Re: Muhibbah Engineering

Postby winston » Mon Jan 12, 2015 6:26 am

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Muhibbah Engineering more than an O&G play

KUALA LUMPUR: Muhibbah Engineering (M) Bhd is more than an oil and gas company, with infrastructure and port projects, and a solid order book of RM2.13bil.

Fundamentals remain strong, with cash of RM245.93mil or 57 sen cash per share, despite the recent sell down in all stocks related to oil and gas.

Up to July 2014, all O&G related stocks were riding the crest of the oil boom, with Brent crude then over US$110 per barrel before falling more than 40% by end-2014.

During the same period, Muhibbah’s share price rallied to a high of RM3.52 in July before skidding to a low of RM1.51 on Dec 16, tracking the plunge in oil prices.

At Thursday’s close of RM1.74, it was trading at 1.2 times its net asset per share of RM1.42 and a price-to-earnings of 8.58 times.

Muhibbah’s core business extends beyond O&G, which includes construction of infrastructure, cranes, marine ship repair and shipbuilding.

It has bagged port and marine projects, new highways including the West Coast Expressway (WCE), and is looking at the Mass Rapid Transit projects.

In December, it secured a RM135mil project from Westports Holdings Bhd to build a 300m wharf and access bridges at the container terminal 8 (CT8) site in Pulau Indah, Selangor.

The letter of award comes with an option to award Muhibbah the job for a second 300m wharf at CT8, with a total contract value of RM256mil.

The company is also eyeing Petronas’ Refinery and Petrochemical Integrated Development (RAPID) project which is estimated to have an investment of RM89bil.

While Petronas is relooking at the projects, those which had received final investment decision (FID) could be spared from potential capex reductions.

As at Sept 30, 2014, its receiveables, deposits and prepayments totalled RM611.70mil while the amount due from contract customers are RM635.29mil.

Its net gearing is about 80.9% at end-December.

Source: The Star
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Re: Muhibbah Engineering

Postby winston » Sun Jan 21, 2018 8:19 am

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Stock pick: Muhibbah Engineering (M) Bhd
Share price: RM3.21

Although Muhibbah’s recent operating margins were compressed to 7.7% (-28.7% y-o-y), we can dispel the negative undertone by looking at the contribution of its concession assets in Cambodia.

The three airports; Siem Reap, Sihanoukville and Phnom Penh contributes on average 30.24% of profit before tax for the past two years.

Muhibbah is backed by a total order book of RM2.1bil with an average backlog duration of 22 months or 1.7 times construction revenue cover.

Despite the trade blockade by Saudi-led coalition to Qatar, the project win from the latter is not entirely muted as in Oct 2017, Muhibbah won another award of RM59.1mil (through 49% joint venture) albeit lower than the previous award of RM438.1mil in January.

MIDF Research recommends four investment themes with the objectives of taking advantage of the pockets of opportunities from externally driven factors (e.g. exports and forex), extracting returns through arbitrage opportunities from fundamental vs. market disconnect and also safeguarding returns through domestic dividend play.

Its four themes are currencies play, exporters market expansion, velocity as an ally and dividend plays.


Source: MOHD REDZA ABDUL RAHMAN, MIDF Investment
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