CIMB Research raised Muhibbah’s profit forecast by 4% to RM70mil for this year.
PETALING JAYA: Analysts have raised their net profit forecast for Muhibbah Engineering (M) Bhd
this year mainly to account for the additional reversal in net impairments for vessel disposals.
CIMB Research raised Muhibbah’s profit forecast by 4% to RM70mil for this year.
Nevertheless, research house said it cut its 2026 and 2027 core net profit estimates by 9% and 18%, respectively, after reducing its assumptions for Muhibbah’s new construction order book by between 20% and 38% to between RM200mil and RM500mil.
“As a result, our target price has been reduced by 10% to 54 sen from 60 sen pegging the stock at an unchanged 60% discount to its sum-of-the-parts value,” the research house said.
As of Nov 13, Muhibbah’s construction order book had declined to RM294mil (down 48% versus RM563mil as of Feb 24).
The group has yet to secure any new major construction wins year-to-date, said CIMB Research.
At the time of writing, the stock was trading at 51.5 sen.
CIMB Research noted that Muhibbah’s core net profit slipped 29% year-on-year (y-o-y) to RM12.9mil on the back of lower project billings.
However, core earnings for the first nine months of this year (9M25) came in at RM65.5mil (up 57% y-o-y ), representing 98% of both consensus and its previous full-year forecasts.
The stronger bottom line was supported by an additional reversal in net impairments of RM6.5mil in the third quarter of this year (3Q25) that was previously assigned to the valuation for certain vessels disposed of, CIMB Research said.
However, excluding the positive impact from the reversal of net impairments related to the vessel disposals, Muhibbah’s 3Q25 core earnings would have dropped by 32% on a quarterly basis to RM6.4mil.
“Revenue for 9M25 fell 32% to RM937mil following the completion of certain construction projects. As expected, the group did not declare any dividends in 3Q25 or 9M25.”
CIMB Research noted in mid-July, Muhibbah’s 21%-owned Cambodia Airports signed a management contract to operate the new Techo International Airport (TIA) in Kandal Province, about 19km south of Phnom Penh, Cambodia.
“While further details were not disclosed, we understand that the management contract for Cambodia Airports took effect in October and Phase 1 of TIA (2025 to 2030) is projected to handle 15 million passengers, rising to 30 million passengers in Phase 2 (2030 to 2050) and to 50 million passengers in Phase 3 (from 2050 onwards),” the research house said.
CIMB Research said it considered the revival of major job wins as a key rerating catalyst for Muhibbah. “On the other hand, we consider the loss of income from Phnom Penh airport’s concession rights as a key derating catalyst for Muhibbah, although this is partially offset by Cambodia Airport’s new management contract for TIA,” it said.
