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Friday, March 22, 2013

CIMB Research ups Muhibbah target price to RM1.24

Source: http://biz.thestar.com.my/news/story.asp?file=/2013/3/22/business/20130322082319&sec=business


KUALA LUMPUR: CIMB Equities Research has raised its target price for Muhibbah Engineering Bhd from 87 sen to RM1.24 after the company bagged RM216mil of vessel orders for its shipbuilding segment.
However, the research house said on Friday it was maintaining a Neutral recommendation as the lack of visibility in job flows in H1, 2013 and election risks could cap further rerating of the stock.
CIMB Research said after a lull in 2012, the RM216mil contracts were positive for the group's shipbuilding segment.
“This is not entirely a surprise as we had expected demand to recover this year. The stock shot up 18% yesterday and the good news is largely priced in,” it said.
The research house said its EPS forecasts are backed by RM1bil worth of assumed new jobs for FY13.
“Though we continue to apply a 50% discount to RNAV, we raise the target price after imputing a higher 13.5 times price-to-earnings (P/E), in line with our revised market P/E, and remove the RM245mil provisions we had earlier imputed in our RNAV.
"We maintain Neutral as the lack of visibility in job flows in 1H13 and election risks could cap further rerating of the stock,” it said.

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