MUHIBAH (5703) - CIMB Research raises Muhibbah Engineering target price
MUHIBAH (5703) MUHIBBAH ENGINEERING (M) BHD
KUALA LUMPUR: CIMB Equities Research has raised its realised net asset value (RNAV) target price to RM3.89, which is still a 20% discount, as it rolls over its valuations.
“Maintain Add. The stock has dropped 17% from its peak in July 2014 due to the global sell-down, which is a buying opportunity. Muhibbah is still our preferred mid-cap pick. Job wins are potential catalysts,” it said.
At RM3.89, this is 37.9% above its last target price of RM2.82, said the research house.
“Muhibbah's chances of securing a RM500mil job in RAPID by year-end reinforces our expectations for the company’s infra order back log.
“We maintain our assumptions for RM600mil infra job wins for FY14 and RM1bil for FY15, driven by domestic oil & gas infra. Muhibbah's latest Samalaju Port expansion project speaks volumes of the group's competitiveness and expertise in the segment,” it said.
CIMB Research said Muhibbah’s infra awards year-to-date have picked up since 1H14, with the latest job being the RM157mil Samalaju Port development in Sarawak.
However, the group has yet to secure any contracts in Rapid, from which the research house expects it to win around RM1bil worth of jobs over the next 12-18 months, based on a 20-30% success rate.
