Muhibbah’s 9MFY17 results below expectation

KUALA LUMPUR: Muhibbah Engi ne ering(M)Bhd’ s( Mu hibb ah) first nine months of financial year 2017 (9MFY17) results have come in below expectations, but analysts are maintaining their earnings forecast for financial year ended 2017 (FYE17) and FYE18.

As per a filing on Bursa Malaysia, Muhibbah reported profit after taxation of RM146 million for the cumulative period ended September 30, 2017 as compared to RM112.1 million for the corresponding period the previous year.

Muhibbah’s 9MFY17 earnings of RM68.4 million met the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus’ expectation at 50.1 per cent and 57.9 per cent of full year estimates, respectively.

“At first glance, it may seem that Muhibbah’s lower earnings is impacted by lower revenue but we reckon that it is deploying more capital to its project in Qatar to expedite the construction progress hence, the decreased in foreign translation,” the research arm said.

On estimates, MIDF Research maintained its earnings forecast for FYE17 and FYE18.

The research arm’s forecast was premised on the quality orderbook of RM2 billion, or approximately 48 months (3.41fold construction revenue cover) backed by recurring cash flow for Muhibbah’s concession asset in Cambodia.

“Its airport concession has contributed five-year average of 24 per cent percent to its operating income,” the research arm said.

“Its working capital-FYE18 net income cover is at 2.01-fold and productive rate of working capital-orderbook cover of 7.2fold.”

That said, MIDF Research maintained its ‘buy’ recommendation with a target price of RM3.45 per share.