Contributions from new jobs should align Muhibbah’s full-year earnings with our forecast. We also expect a recovery in project awards, especially oil & gas and marine/port projects. 9M results were in line at 67% of our full-year forecast. But our target price (40% discount to RNAV) is cut as we apply a lower CY13 P/E of 12.6x to construction and shipyard earnings and update for a higher risk premium. Maintain TRADING BUY as the stock looks ripe for a re-rating.
The stock has declined 29% YTD, mainly because the APH issue remains unresolved. However, the odds of provisioning for the project appear slim currently given that the receivership status was lifted in Aug 11. We think that a more likely catalyst for the stock is project awards. Keep close tabs on potential project awards such as the KVMRT, Pengerang oil & gas terminal and Vale, among others.
The stock has declined 29% YTD, mainly because the APH issue remains unresolved. However, the odds of provisioning for the project appear slim currently given that the receivership status was lifted in Aug 11. We think that a more likely catalyst for the stock is project awards. Keep close tabs on potential project awards such as the KVMRT, Pengerang oil & gas terminal and Vale, among others.
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