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Thursday, June 20, 2013

Muhibbah’s shares rally on vessel delivery (BT)

Muhibbah Engineering Bhd’s shares rallied after the company delivered Malaysia’s first homemade diesel electric platform supply vessel (PSV) to Icon Offshore Bhd, the country’s third largest offshore vessel support company.

Muhibbah was the eighth most actively traded stock, jumping some 18 sen to end at RM1.60 a share, its highest close in nine months.

A total of 20.3 million shares were traded, about 11.6 times more than the previous day’s volume.

This month alone, two brokers upgraded Muhibbah’s target price and ratings amid expectations that the Klang-based company, which has a growing international presence, will match the upbeat market outlook on the company.

Muhibbah owns 62 per cent of Favelle Favco Bhd, which is one of the world’s top offshore crane makers.

CIMB Research in a report said it expects Muhibbah to add between RM200 million and RM300 million worth of new jobs in the second half of the year.

At the group level, Muhibbah has an order book valued at RM2.1 billion, of which RM645 million is for cranes and RM196 million for shipyards.

At the handover ceremony of the PSV yesterday, Icon’s chief executive officer Dr Jamal Yusof said the Muhibbah-built ship has a market value of between US$25 million and US$30 million (RM79 million and RM95 million).

“We expect to take delivery of another diesel electric PSV from Labuan Shipyard and Engineering Sdn Bhd in November,” Jamal said, adding that the value is similar to the current vessel.

Meanwhile, Muhibbah managing director Mac Ngan Boon said the company will continue to maintain its focus on oil and gas activities.

“The present trend in the country is towards oil and gas activities, so certainly we are focusing a lot more on that,” said Mac.

Kenanga Research, which increased Muhibbah’s target price to RM1.63 this month, expects the company’s net profit at the group level in the current year ending December 31 2013 to come in at RM81.86 million, and RM93.33 million the following year.

In 2012, Muhibbah posted a net profit of RM76.55 million.

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