PETALING JAYA: Analysts believe Malaysia Marine and Heavy Engineering Holdings Bhd
’s (MMHE) earnings profile has structurally improved, led by marine repair and supported by a clearer long-term transformation strategy.
UOB Kay Hian (UOBKH) Research upgraded the stock to “buy”, stressing that 2025 results surprised on the upside, due to marine repair.
“We are not concerned over its declining oil and gas (O&G) order book as we view MMHE as rightly positioned to capture more opportunities in marine repair, renewables and floating solutions,” the research house said.
Although group revenue declined as legacy O&G fabrication jobs near completion, MMHE secured positive claims from completed projects, while the marine division delivered record quarterly profitability.
UOBKH Research said the stock’s discount to valuations would gradually disappear once MMHE meets MHB30 targets, maintaining a 50-sen target price based on 0.5 times 2026 price-to-book.
It guided 40 sen as a floor target price derived from dividend yield assumptions tied to MHB30’s payout ambitions.
RHB Research is equally upbeat, keeping “buy” and raising its target price to 66 sen, implying 72% upside.
The research house highlighted that financial year 2025 (FY25) core profit of RM119.3mil exceeded its and street’s full-year forecasts by 183% and 149%, mainly driven by stronger earnings from the marine segment.
“We remained constructive on the group’s outlook, supported by a healthy order book and expanding exposure to clean energy and low-carbon projects.”
RHB Research shifted to a price earnings-based valuation to reflect the group’s strengthening profile following nine consecutive profitable quarters.
UOBKH Research noted the marine repair division achieved another new milestone, completing 87 vessels in 2025, including 26 liquefied natural gas (LNG) carrier jobs versus 16 a year earlier.
The increase in higher-value LNG carrier work underscores MMHE’s growing track record in complex retrofits.
However, UOBKH Research cautioned that margins remained thin, with 4Q25 marine operating margins only inching up from 10% to above 11%, reflecting intense yard competition.
On order book trends, RHB Research highlighted that MMHE’s 4Q25 order book of RM4bil was down 17% quarter-on-quarter as revenue recognition outpaced replenishment but backed by a sizeable RM14bil tender book.
UOBKH Research acknowledged the shrinking O&G order book but viewed it as “manageable”, arguing MMHE is repositioning towards marine repair, renewables and floating solutions.
Looking ahead, UOBKH Research forecast net profit of RM83mil to RM85mil over 2025 to 2027, with dividend yields rising to 4.9% by 2027.
RHB Research projected recurring net profit of RM122mil in FY26 and FY27 and expected earnings before interest, tax, depreciation and amortisation margins to expand to 11.9% in FY26.
An analyst told StarBiz that the near-term downside risks remained, notably factors including global geopolitical and economic risks that can disrupt sourcing of materials and equipment.
There are project delivery challenges due to rising costs, volatile commodity prices (oil, gas and steel), and competition with other bigger and more modern yards.
