The research house said Muhibbah's Cambodian airports could report losses for the second quarter, which was the peak of the Covid-19 travel restrictions.
"Even now, tourists are deterred from travelling into Cambodia given the multiple SOPs and restrictions imposed i.e. compulsory testing for Covid-19 upon arrival," it said. The group's current order-book of RM1.3b provides visibility for a year, it added.
The research house cut the group's FY20 and FY21 core net profit by 65% and 30% after factoring in losses for its construction division and lower passenger traffic for its Cambodian airports due to the pandemic.
However, Kenanga maintained "outperform" on the counter while lowering its target price to RM1.15 from RM1.20 previously. Muhibbah last traded at 95.5 sen at Monday's close.
In the recent quarter, Muhibbah's core net profit of RM3.1mil missed expectations, acounting for only 4% and 3% of Kenanga's and consensus full-year estimates.
Earnings improved to RM3.1mil quarter-on-quarter due to huge provisiosn made for project claims and variation orders from its construction division in the previous quarter.
Year-on-year core net profit fell 92% due to weaker associate contributions from its Cambodian airports and a pre-tax loss of RM11mil from the construction division.