TA Securities has downgraded its call on the group to “hold” from “buy” with a lower target price (TP) of 53 sen from 64 sen previously.
MHB posted a net loss of RM105.2 million in Q3 FY2023 from a net profit of RM15.9 million in the same quarter last year, despite its revenue increasing 56% to RM638.5 million from RM409.2 million.
The group said in its local bourse filing yesterday that the widening of its losses was due to additional cost provisions for ongoing heavy engineering projects as well as the weakening of the ringgit.
In a note today, TA Research said that MHB’s cumulative nine-month (9M FY2023) core net loss of RM473.6 million fell short of its forecast of RM82.4 million loss, and consensus forecast of a RM34.7 million core profit.
Following the Q3 FY2023 results, the research house has slashed MHB’s earnings forecasts for FY2023 to a net loss of RM398.9 million.
MHB is a shipbuilding and heavy engineering industries company which is mainly involved in oil and gas engineering and construction works.
Healthy order book
TA Research, however, projects that MHB’s marine segment will benefit from the anticipated increase in energy shipment demand particularly in Far East countries and Europe during winter.
It added that MHB’s latest order book as at end-September of RM5.7 billion would provide earnings visibility up to FY2025, while its tender book amounts to RM2 billion-RM3 billion.
“The group is looking at securing renewable energy (offshore wind) and decarbonisation sector (carbon capture and storage) contracts to sustain and grow its order book,” TA Research noted.
Similarly, RHB Investment Bank Research (RHB IB) has maintained a “buy” call on MHB with a TP of 60 sen based on its promising order book.
“We believe the group’s robust order book of MYR5.7 billion will support its earnings growth for FY2024-2025F,” RHB IB said in a note today.
“We maintain our optimistic outlook as we anticipate there will be no further instances of cost provisions going forward,” it added.
Meanwhile, MIDF Research has maintained a “neutral” call on MHB with a TP of 51 sen.
“MHB’s Q3 FY2023 results were way below our yearly expectations,” it said in a note today.
However, MIDF Research said that MHB will benefit from writebacks for some of its projects as earnings had improved on a quarterly basis by nearly threefold.
As at 12.26pm, MHB’s share price was unchanged at 49 sen, giving it a market capitalisation of RM784 million.