KUALA LUMPUR: Alliance Research has maintained its Buy call on Muhibbah Engineering with a target price of RM3.50 based on 15 times FY15F PE.
In a note on Monday, the research house said Muhibbah's first quarter net profit of RM23mil was in line, but turnover missed by 8% on-year and 20% on-quarter due to the timing of recognition of construction and crane orders, while the contract with Jasa Merin for its shipyard has largely been recognised.
Alliance said Muhibbah believes the infrastructure sector is on a multi-year upcycle with potentially RM140bil worth of projects up for grabs.
Also, raw material costs are more benign now with cement and steel prices 5% and 15% cheaper on-year, respectively.
It said that Muhibbah will be bidding for major projects such as RAPID, MRT Line 2 and WCE, and is quietly confident of clinching other marine-based contracts.
"Year-to-date wins amount to RM277mil, and it should close the year better than the RM504mil wins in 2014," it noted.
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