KUALA LUMPUR: CIMB Securities Sdn Bhd has reduced its earnings projections for Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) by 16.4 per cent and 25.4 per cent for financial years 2025 (FY25) and FY26 respectively due to slower-than-expected job replenishment.
MMHE's orderbook stood at RM5.4 billion as of the third quarter of 2024 (Q3 2024), down 5.1 per cent year-on-year and marked a 13.9 per cent decline from RM6.3 billion in FY23.
"Our back-of-the-envelope calculation indicates that MMHE has only replenished around RM1.9 billion in new orders this year, covering just 27-32 per cent of its RM6 billion-RM7 billion tender book," CIMB Securities said in a note.
The firm adjusted its order book replenishment assumptions for the company to RM2.1 billion, RM2.5 billion and RM2.5 billion for FY24, FY25 and FY26 respectively.
"Our forecasts are based on the construction progress billings from the remaining order book, after reflecting the estimated work completed, and we have not included any cost reversals owing to lack of clear guidance from MMHE," it said.
MMHE's net profit for the first nine months of 2024 stood at RM77.2 million, a turnaround from a core net loss of RM475.9 million in the same period last year.
Overall, CIMB Securities said the results were in line with its expectations at 75.8 per cent of its FY24F full-year core net profit forecast, but exceeded consensus expectations at 90 per cent.
The firm maintained its 'Hold' call on the stock with a lower target price of 44 sen.