PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd
’s (MMHE) marine repair segment is poised to be its next earnings growth driver, especially if it continues its momentum of improved project delivery and facility upgrades, says UOB Kay Hian (UOBKH) Research.
Following a visit to the group’s yard, the research house added that it is bullish on this segment, projecting higher workloads and profit margins despite higher depreciation.
UOBKH Research raised its earnings forecasts for MMHE’s financial year 2026 (FY26) and FY27 by 5% and 14%, respectively, while lowering the FY28 forecast by 10%.
“If the improved project execution can be maintained alongside upgrades and automation in yard facilities, MMHE should be able to sustain ship repair works (which were at an all-time high) while taking on more conversion jobs, potentially three in 2026 (2025: one),” it said.
“Having recently formed Floating Production Solutions Sdn Bhd (FPS), a joint venture with MISC Bhd’s offshore division, the group is positioning itself to capture opportunities in the incoming floating production, storage, and offloading (FPSO) supercycle,” UOBKH Research said.
“Notably, conversion jobs carry higher margins compared to repeat ship repair works, and MMHE is the only Malaysian yard capable of undertaking FPSO and floating storage and offloading (FSO) conversions,” it added.
Following a multi-year lull in floater conversion jobs, the region’s floater demand appears to be seeing a rejuvenation in 2026, with two projects – FPU Kelidang in Brunei and FSO Santos in Papua New Guinea – secured by MISC under FPS year-to-date.
“While 50% of the conversion project margins could now be channelled to MISC, MMHE will have a greater share of revenue from the engineering to installation stage,” the research house said.
Meanwhile, UOBKH Research said the group’s increased number of liquefied natural gas carrier (LNGC) jobs and repeat ship repair jobs should be sustainable.
MMHE’s upgrades and transformation have resulted in observably stronger project execution in both its offshore and marine repair segments, which have seen on-time or ahead-of-schedule deliveries and enhanced client satisfaction.
However, the higher number of conversion jobs in 2026 necessitates equipment upgrades and automation to match LNGC repair volumes year-on-year.
The research house now assumes a higher capital expenditure for MMHE, to be aligned with the 2025 level of RM162mil, which will go towards asset rejuvenation, upgrades, and technology adoption.
UOBKH Research said it views this spending as necessary to maintain MMHE’s leadership position in project delivery and ship repair, and to meet its targets on operating cash flow and dividend growth. It has maintained a “buy” call on the stock with an unchanged target price of 50 sen.
