MIDF Research has revised MMHE’s earnings estimates for FY24 and FY25 by a positive 40% and 11%, respectively.
PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd
’s (MMHE) target price has been upgraded by a number of research houses, as the company’s third quarter ended Sept 30, 2024 (3Q24) financial results posted another profitable quarter and continues to make headway in turning around.
UOB Kay Hian (UOBKH) Research said “the continuous trends of positive project close-outs and claims alongside steady execution MMHE managed to sail away most of the platforms despite having many projects on its plate at once, prompted us to upgrade our future forecast and reduce our scrutiny”.
The research house has upgraded the company’s financial year ending Dec 31, 2024 (FY24), FY25 and FY26 earnings by 37%, 52% and 28% respectively, retaining a “buy” call with target price (TP) of 70 sen a share and noting that the price-to-book valuation remains undemanding compared to peers.
In addition, it has upgraded the marine segment’s forecast slightly on diversification efforts to address rising competition.
“We see value in MMHE’s transformation story, as it enabled the yard to continue to benefit from sustainable profit recovery (for marine), and environmental, social and governance/decarbonisation opportunities,” it said, adding that while the marine segment remains profitable, competition has been stiffer than expected.
Maintaining a “buy” call, RHB Research has raised FY24, FY25 and FY26 earnings by 13%, 14% and 14%, respectively, on better margin for the heavy engineering (HE) segment.
It has raised the stock’s TP to 62 sen based on the robust order book of RM5.4bil, also noting that fabrication works for offshore substations provided the company with a robust outlook, securing activity and revenue visibility until 2028.
MMHE also has a solid tender book of between RM8bil and RM9bil, with approximately 21% international and 79% domestic projects.
MIDF Research has also revised MMHE’s earnings estimates for FY24 and FY25 by a positive 40% and 11% respectively and maintained a “buy” call with a revised TP of 72 sen pegged on a price-to-earnings ratio of eight times to a revised earnings per share of nine sen amid a recovery in MMHE’s HE and marine businesses, moving forward.
Meanwhile, CIMB Securities has maintained a “hold” rating on the stock with a lower TP of 44 sen from 51 sen on potential downside risk to oil prices given the incoming US president Donald Trump’s prioritising domestic oil production expansion. “A decline in oil prices could result in reduced capital spending by major oil companies, hence leading to lower order book replenishment,” it said.
