Muhibbah Engineering (M) Bhd appears to be heading to new highs surpassing its 52-week high of 86 sen seen last month.

There are indications an upward movement is probable in view of the bullish technical signals emerging.

The stock is expected to advance towards resistance thresholds of 86 sen and 93 sen respectively.

Not bad for a counter which was slumped to a year low of 58 sen in June last year.

This bullishness could be supported by improving financials.

Muhibbah returned to the black with net profit of RM6.1 million in 3QFY23 from net loss of RM1.3 million previously), taking 9MFY23 performance to increase by 25-fold yoy to RM13.3 million.

The infrastructure contractor, cranes & intelligent automation provider and airport concession operator is projected to register net earnings of RM30.2 million in FY2023 and RM49.1 million in FY2024 based on consensus estimates.

In terms of valuations, this translates to FY23-24 P/E multiples of 18.9x and 11.6x, respectively.

Muhibah won two new projects last November with a total value of RM479 million, bringing its total outstanding secured order book to RM2.41 billion as at 22 Nov 2023.

It has now surpassed pre-pandemic level of RM1.6 billion order book coupled with better margins profile.

Contract flows have been picking up, and since 3Q22 with more Petronas driven projects and its orderbook of RM2.4 billion, have exceeded Aug 2019 levels of RM1.7 billion.

As for its concession segment, its 2 international airports mainly via its 21% stake in Societe Concessionaire de I’Aeroport (SCA), registered a substantial surge in profit primarily due to the YoY increase in total passengers traffic surging from 1.4 million to 3.69 million.

Good news is that the concession segment will continue to deliver commendable figures as operating leverage kick-in gradually in-line with recovery in number of tourists.

Muhibah also maintains a low net gearing of <10% thus enabling it to remain flexible in securing more contracts going forward.

That siad, while contract flows have been encouraging, the key to a sustainable re-rating of the stock price would be more solid execution and in turn earnings delivery.