KUALA LUMPUR: RHB Research has raised its target price for Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) following its recent earnings that came within the firm's expectations and expected stronger quarters ahead.
The research firm remained optimistic about the company's outlook as it phases out older projects and undertakes new ones, which are believed to have more favourable terms.
"MMHE's Q1 2024 core net profit of RM7.7 million was 20 per cent and 16 per cent of ours and consensus' estimates. We expect stronger quarters ahead from the recognition of its strong order book," it said in a note.
The firm raised its target price for the stock to 60 sen from 57 sen previously.
As of the first quarter, MMHE's orderbook stood at RM5.4 billion, a 14.3 per cent decline quarter-on-quarter due to the recognition of several orders.
Ongoing projects include the Jerun, Rosmari-Marjoram, and Kasawari carbon capture and storage projects, as well as the joint development area field development project.
Meanwhile, the fabrication of the offshore substation high voltage direct current platform for TenneT's two gigawatt offshore wind farm programme is expected to start in 2025.
The group has a tenderbook valued at RM6-7 billion, with a 50:50 split between international and domestic jobs.
"With the current orders on hand, the group is likely to secure smaller-sized projects. Following a soft quarter, dry dock utilisation has seen improvement due to higher demand for drydocking and repair services. The overall dry dock utilisation rate is guided to be more than 70 percent," it added.
RHB Research maintained its earnings forecast for the company and kept its "buy" call.
