PETALING JAYA: Muhibbah Engineering (M) Bhd
may see higher project flows for its key divisions of construction, cranes and shipyards in light of rising crude oil prices.
In a report, CGS International (CGSI) Research says a stronger construction order book and better earnings visibility will help mitigate the lower concession profits from the group’s airport division, following the new management service agreement structure in Cambodia.
As for valuations, the research firm said the stock’s dividend yields for financial year 2026 (FY26)-FY28 look attractive at 5%-7%. It reiterates its “add” call on Muhibbah with a sum-of-parts based target price of 81 sen a share.
CGSI Research said the re-rating catalysts for the group would be better earnings delivery and stronger tourist arrivals in Cambodia.
It noted that Muhibbah’s balance sheet is stronger now, with a net gearing of 2.5% as at December 2025 (12%-28% in FY22-FY24) due to better collections. High cash levels at Societe Concessionaire de l’Aeroport (SCA), where Muhibbah has an effective stake of 21%, may lift dividends.
Recall that SCA received a total compensation of about US$203mil in 2024/25 for early termination of the concessions.
According to the research firm, Muhibbah has a tender book of RM3.8bil (RM2.2bil construction and RM1.6bil cranes) now and is building two anchor handling tugs at its shipyard.
