INVESTMENT HIGHLIGHTS

• Clinched RM438.1m contract from Qatar government

• Orderbook lifted by 12.0%

• Reaffirm our earnings estimates

• We maintain our BUY recommendation with an unchanged TP of RM3.05

RM438.1m job in Qatar formalised. Muhibbah has formalised a contract with the Economic Zones Company of Qatar to undertake the construction of roads and infrastructure in Um Alhoul Economic Zone 3, Doha (QEZ3). The location is 20-km away from Hamad International Airport. The contract is formalised through its 49.0% subsidiary; Muhibbah Engineering Middle East LLC.

Orderbook lifted by 12.0%. The award was within our job replenishment assumptions with the current effective orderbook increased by +12.0% from RM1.8bn to RM2.01bn. Notably, the project is within the marine cluster of QEZ3 which falls under Muhibbah’s expertise core expertise.

Impact on earnings. Nonetheless, we make no changes to our FYE17/FYE18 earnings forecasts. As stated in above, the award is within our job replenishment target of RM600m and factored in the marginal assumptions of 10.5% on the back of 49.0% shareholdings in the JV company

Recommendation. We maintain our BUY recommendation with a TP of RM3.05 per share based on sum-of-parts valuation (SOP) supported by current EV/EBITDA of 12.2x below its peers median of 13.9x implying an attractive discount.

Source: MIDF Research - 11 Jan 2017