Petronas licence set to be Muhibbah's game-changer
By Lim Cian Yai
KUALA LUMPUR: Muhibbah Engineering Bhd's shares surged and broke the RM2 barrier yesterday after research firm HwangDBS said the company's earnings per share may rise between three and 10 per cent.
The earnings booster for Klang-based Muhibbah is attributed to the licence it secured from Petroliam Nasional Bhd (Petronas).
HwangDBS said the licence is a "game-changer" for Muhibbah, as it allows the company to bid for oil and gas projects worth as much as RM5 billion .
As it stands, nearly half of Muhibbah's order book are filled with jobs from the oil and gas sector. With this in mind, Muhibbah in now working on a plan to double its fabrication yard capacity.
The expansion is set to boost Muhibbah's role in the sector, where it is among the top three largest licence holders by virtue of its 20,000-tonne annual capacity.
On the trading floor, the buying side for Muhibbah shares was positive, resulting in sustainable purchasing. Some 7.43 million Muhibbah shares exchanged hands yesterday, with the stock closing 12 sen higher at RM2.06 a share.
If the HwangDBS assessment is accurate, then there is more legs left for the stock to rally, as the research firm reckons that Muhibbah shares can hit RM3.10 within the next 12 months.
According to data compiled by Bloomberg, four out of five brokerage firms that track Muhibbah, namely HwangDBS, Kenanga Research, KAF Seagroatt & Campbell and CIMB Research, gave the counter a "buy" or "outperform" ratings, with target prices ranging from RM1.80 to RM3.10.
Analysts also expect Muhibbah to return to the black this year with a net profit of RM86.42 million on the back of RM2.2 billion revenue.
Last year, Muhibbah suffered a net loss of RM98 million.
Publish date: 16/07/13