What’s New

Muhibbah Engineering Middle East LLC, an entity in which Muhibbah has 49% equity interest, has received a contract worth Qatari Riyal 356.7m (c.RM438m). Its JV partner is Manateq, a leading developer and operator of specialised economic zones, logistic parks, and warehousing parks in Qatar. According to the announcement, Manateq was established by the Minister of Business and Trade of the State of Qatar and is owned by the Qatari Government. The scope of works is for the construction of roads and infrastructure works at Um Alhoul Economic Zone (QEZ-3) Phase 2.1. 

While a 49% stake for Muhibbah would imply a contract value of RM215m, we understand Muhibbah will be doing the majority of works. Hence, the total contact could be a lot higher. If we conservatively assume just the 49% stake, Muhibbah’s construction orderbook will increase by 22% to RM1.2bn. Factoring the recent RM64m win by Favelle Favco, Muhibbah’s total orderbook stands at RM1.9bn, implying visibility of more than a year. We make no changes to our earnings as the win falls within our RM850m new order win assumption for FY17F.

We think execution risk should be manageable given it has prior experience in the Middle East – involving the New Doha International Airport Catering facility and Yemen jetty works.

Source: Alliance Research - 11 Jan 2017