MHB: Earnings Outperform on Robust Operations, Valuation Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company delivered a strong finish to its fiscal year 2025, with core profit significantly exceeding market expectations. The robust performance was largely attributed to strong operational efficiencies and strategic project execution.
Performance Review
The company’s FY25 core profit reached MYR119.3 million, outperforming internal forecasts by 183% and Street consensus by 149%. This exceptional financial outcome was driven by a solid 14% quarter-on-quarter (QoQ) increase in revenue, which climbed to MYR581.7 million. Consequently, operating profit surged by 76% QoQ to MYR55.8 million, with the core profit for the fourth quarter (4Q25) recorded at MYR58.9 million, marking a 68% QoQ improvement.
The marine segment emerged as a key driver of this stellar performance, registering a substantial increase in operating profit to MYR25.2 million from MYR9.6 million in the previous quarter. Additionally, favorable close-out adjustments from recently completed projects within the heavy engineering (HE) segment contributed positively to the strong quarterly results.
Challenges and Outlook
Despite the strong earnings, the company faces certain challenges. As of 4Q25, the group’s orderbook stood at MYR4 billion, representing a 17% QoQ decline, as revenue recognition outpaced the replenishment from new contract wins. Furthermore, the company highlights slower order replenishment, higher-than-expected material costs, and potential labour shortages as key downside risks that could impact future performance.
Looking ahead, the outlook remains positive, supported by a healthy pipeline of potential job wins. The company’s tenderbook, valued at approximately MYR14 billion, provides significant earnings upside visibility. Key ongoing projects, including the EPCIC contract for two wellhead platforms and the Kasawari Carbon Capture and Storage (CCS) development, continue to progress. Fabrication works for another offshore substation (OSS) HVDC platform project are also anticipated to commence in the first quarter of fiscal year 2026.
Investment Recommendation
Investment Bank TA SECURITIES has maintained its “BUY” recommendation for the company. The target price has been revised to RM0.25, indicating a 25.0% upside potential from the last traded price of RM0.20. This revised valuation methodology reflects a shift to a PE-based approach, acknowledging the company’s strengthened profitability profile after achieving nine consecutive profitable quarters.
