Muhibbah Engineering has secured a RM120 million contract for noise barrier and enclosure works under the Penang LRT Mutiara Line, marking its first construction job win for financial year 2026.
In a research note, CGS International Securities said the contract was awarded by Gamuda Industrial Building System Sdn Bhd and is scheduled to commence in April 2026, with completion targeted by the third quarter of 2030.
The latest win reinforces Muhibbah’s growing niche in noise barrier projects, having previously undertaken similar works for major rail developments such as MRT and LRT 3, as well as highway projects including the Sungai Besi–Ulu Kelang Elevated Expressway.
Orderbook boosted, construction outlook improves
The contract lifts Muhibbah’s construction orderbook to approximately RM983 million, or RM1.6 billion including its crane segment. CGS noted that the job accounts for about 30% of its FY2026 new contract win forecast of RM400 million, with estimated gross profit margins of 8% to 9%.
The research house described the award as a significant milestone, building on the group’s earlier RM700 million to RM850 million EPCC contract secured from Petronas in December 2025—its first major win since November 2023.
With these wins, Muhibbah’s construction division is seen to be on firmer footing, helping to offset anticipated earnings decline from its Cambodia airport segment, which has transitioned from a concession model to a management services agreement.
Valuation seen as overly pessimistic
Despite the improving outlook, CGS highlighted that the market is currently assigning a negative implied value of RM111 million to Muhibbah’s construction division.
This valuation is derived after stripping out the group’s stakes in Favelle Favco Berhad, Master-Pack Group Berhad, and its interest in Cambodian airport operations from its overall market capitalisation.
CGS argued that such a valuation is overly pessimistic, noting that Muhibbah holds a licence from Petronas for offshore facilities construction and has an established track record in executing major projects.
Reiterate ‘Add’ with RM0.81 target price
The research house reiterated its “Add” recommendation on Muhibbah with a sum-of-parts target price of RM0.81.
It added that the group offers exposure to a recovery in tourism through its Cambodian airport operations, as well as potential upside from oil and gas job flows via Petronas.
Dividend yields are projected to remain attractive at between 5% and 7% for FY2026 to FY2028.
Key risks include weaker-than-expected earnings performance and rising raw material costs, while potential re-rating catalysts include stronger earnings delivery and a rebound in tourist arrivals in Cambodia.
