Muhibbah Engineering (M) Bhd experienced a rise of 2.00%, closing at RM0.51 during mid-afternoon trading. The stock fluctuated between RM0.505 and RM0.52, with approximately 2.06 million shares traded.
This positive sentiment was attributed to new contract awards and a more optimistic earnings forecast from analysts, who maintained an “Add” recommendation with a target price of RM0.81. The analysts emphasized the enhancement in order book visibility and potential re-rating catalysts stemming from the recovery in the construction sector and tourism-related assets.
Hong Leong Investment Bank Bhd maintained its positive stance on Muhibbah Engineering while CGS International Securities also reiterated an Add recommendation with a sum-of-parts target price of RM0.81, as analysts pointed to the group’s RM120 million Penang LRT noise barrier contract as a key boost to its construction pipeline and earnings visibility, alongside expectations of continued dividend yields of 5% to 7% through FY2026 to FY2028.
The RM120 million award for the design, supply, installation, testing and commissioning of noise barriers and enclosures for the Penang Light Rail Transit Mutiara Line project was secured from Gamuda Industrial Building System Sdn Bhd, with work scheduled to commence in April 2026 and targeted for completion by the third quarter of 2030, marking Muhibbah’s first construction win for FY2026 and reinforcing its niche in rail and infrastructure noise barrier works.
Analysts said the contract lifts Muhibbah’s construction orderbook to about RM983 million or around RM1.6 billion including its crane segment, accounting for roughly 30% of FY2026 new contract win forecasts, while gross profit margins are expected in the range of 8% to 9%, helping to offset earnings pressure from its Cambodia airport operations which have shifted to a management services model.
CGS International noted that despite improving fundamentals, the market is still assigning an overly pessimistic negative implied valuation to the construction division, even as Muhibbah’s Petronas-linked capabilities and track record in large-scale infrastructure projects continue to support longer-term earnings recovery potential and position the stock for a gradual re-rating as execution improves.
