PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd
’s (MMHE) marine segment is seen as an emerging key growth driver, underpinned by strong earnings momentum and a rising pipeline of higher-value projects.
BIMB Research said it remains optimistic about the segment following its strong performance in the financial year 2025 (FY25).
“We remain optimistic on the marine segment that’s driven by higher-value conversion activities,” it said, adding that this structural shift is still underappreciated by the market now.
Revenue from the marine segment surged 33% year-on-year to RM560mil in FY25, marking its highest level on record for this segment.
The growth was largely supported by a series of conversion projects, including floating storage and offloading (FSO) and floating production storage and offloading (FPSO) units, alongside steady contributions from repair and drydocking activities.
Additionally, the segment delivered profit before tax of RM63mil, accounting for about half of the group’s total earnings.
BIMB Research highlighted the segment’s order book stood at around RM600mil as at end-FY25, providing solid earnings visibility in the near term.
It noted that a significant portion of this pipeline is expected to be tied to ongoing and upcoming conversion works for MISC Bhd, including projects such as FPSO Kelidang and FSO Papua New Guinea.
On a separate matter, MMHE has recently entered into a memorandum of understanding with Hanwha Power Systems Co Ltd to explore opportunities in new building, as well as vessel conversion and retrofit projects.
Under the collaboration, MMHE will provide shipyard construction and installation capabilities, while Hanwha contributes engineering and procurement expertise.
BIMB Research views the partnership positively, noting that it aligns with MMHE’s ambition to evolve into a premium shipyard by 2030.
While the agreement is currently non-binding and does not yet contribute to earnings, it strengthens the group’s positioning to tap into newbuilding opportunities amid tightening global yard capacity.
“Over time, this could unlock higher-margin opportunities and diversify its revenue base,” the research house said.
The group’s overall order book remains robust at RM4.6bil which reflects a disciplined approach to risk management while improving yard utilisation.
BIMB Research maintained a “buy” call on MMHE with an unchanged sum-of-parts target price of 94 sen, equivalent to one time FY26 price-to-book value.
The research house added that the company’s return to steady profitability in recent years, combined with its relatively undemanding valuation, supports a positive investment outlook.
