Overview and Company Profile
Malaysia Marine and Heavy Engineering (MMHE MK) is a Petronas‐owned deepwater offshore oil and gas fabricator distinguished by its expertise in handling complex Engineering, Procurement, Construction, and Commissioning (EPCC) scopes. The company is equipped to manage a range of projects including Central Processing Platforms (CPP) and Wellhead Platforms (WHP). With a focus on delivering sustainable profit recovery and structural transformation, MMHE is positioning itself to capitalize on the evolving landscape in offshore and marine industries.
The stock is currently rated as a BUY with a maintained recommendation. Trading at RM0.39, the target price is set at RM0.70, suggesting a compelling upside potential of approximately 80%.
Stock Data and Market Position
MMHE MK is listed under the Energy sector (GICS). The company has 1,600 million shares issued with a market capitalization of RM624 million (approximately US\$171.7 million). The 52‐week trading range is noted from RM0.36 to RM0.53, with an average three‐month daily turnover of US\$0.2 million. Furthermore, the FY25 Net Asset Value (NAV) per share is expected to be RM0.90 with a net cash per share forecast at RM0.13.
Major shareholders include MISC Bhd holding 66.5% and Technip SA at 8.5%. The current valuation metrics feature a 0.7x 2025F Price-to-Book (P/B) ratio, positioning the stock as undemanding relative to its peers.
Performance Highlights and 2024 Results
MMHE closed 2024 on a high note with phenomenal profits driven by positive project close‐outs, which underscored its strong track record in project execution. The company’s core profit performance notably exceeded conservative expectations, reaching 117% of forecasts while aligning with street estimates. Enhanced by undisclosed favorable project hedging, particularly in the offshore segment, these results underline MMHE’s capacity to structurally optimize its delivery, despite a slight decline in marine profit margins quarter-on-quarter.
In 2024, total revenue hit RM3,608.6 million, with the offshore segment contributing RM3,186.6 million and the marine segment recording RM422.0 million. Despite some quarter-on-quarter softness evident in 4Q24, the EBITDA and core profit figures continued to reflect a robust underlying performance driven by project closeouts and hedging gains.
Detailed Financial Performance
Key 2024 Financial Metrics
The operating profit for 2024 was RM141.0 million (with the offshore division at RM110.1 million and the marine segment contributing RM41.0 million). Despite the operating margin in 4Q24 showing a significant dip due to a combination of cost pressures and one-off items, the overall profitability narratives remain positive with core profit beating conservative forecasts.
Net profit for the full year stood at RM121.0 million compared to a subdued performance in previous periods. Valuable insights from the earnings revision included favorable project hedging and strategic cost containment measures that contributed to improved profitability, even though margins were challenged by supply chain disruptions and competitive pressures in the marine repair segment.
Segmental Performance and Forecasts
The revenue breakdown and operational performance by segments indicate a clear stratification: the offshore division is projected to generate RM2,590.0 million in revenue in 2025F, RM2,190.0 million in 2026F, and RM2,865.0 million in 2027F, while the marine repair segment is expected to account for RM430.0 million, RM510.0 million, and RM430.0 million respectively over the same
