Muhibah (5703)
Target Price RM1.95

Muhibbah has secured a US$158.33 mln (MYR581 mln) sub-contract from turnkey contractor, YEMGAS FZCO, for the construction of a liquefied natural gas (LNG) jetty in Yemen, which is part of the country’s LNG plant project.

YEMGAS FZCO is a joint venture between four parties, i.e. France’s Technip (Not Listed), Japan’s JGC Corp. (1963 JP, JYP1,924, Not Ranked), and the US’ Kellogg-Brown (Not Listed) and Roots Inc. (Not Listed).

The project owner for the entire LNG plant project is Yemen LNG Company Ltd., of which the shareholders are Total (FP FP, Euro 50.35, Not Ranked), Yemen Gas Company (Not Listed), Hunt Oil Company (Not Listed), Exxon Mobil (XOM US, US$65.36, Strong Buy), SunKyong Corp. (Not Listed) and Hyundai Corp. (011760 KS, KRW23,500, Not Ranked).

Muhibbah’s portion of works comprises the construction of a LNG loading jetty, water intake/outfall pipes, pumping station, outfall basin, electrical substation and navigation aids. The duration of works is over 25 months, starting in Sep. 2006 with project completion in Oct. 2008.

This new contract is a positive development, in our view. With this new contract, Muhibbah’s unbilled order book for construction should double to MYR1.13 bln, according to our estimates, from around MYR550 mln as at June 2006. Of the MYR1.13 bln, MYR630 mln (56%) was secured just over the past two months which should contribute meaningfully to
earnings in 2007.

Full Article : Standard & Poors