KUALA LUMPUR: Shares of Muhibbah Engineering Bhd were actively traded and rose on Friday, June 17 after having been sold down a day earlier following concerns that Asia Petroleum Hub (APH) -- which it undertook a project for -- faced receivership.
At 9.15am, Muhibbah was up one sen to RM1.53 with 3.02 million shares done. Its subsidiary Favelle Favco gained three sen to RM1.64.
Muhibbah suffered the steepest single day fall yesterday since Jan 14, 1998 in a knee-jerk reaction to the possibility that APH was facing receivership. The stock fell 20% or 38 sen to RM1.52 with 45.7 million shares done.
Some analysts viewed the selling yesterday as overdone and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.
APH, the developer and operator of the APH oil terminal in Johor, faced the prospects of receivership, news reports said. Muhibbah was awarded the marine piling and jetty works worth RM820 million. Cost escalation in 2008 led to funding issues for APH and the stalling of payments due to Muhibbah.
CIMB Equities Research had said the unpaid amount accumulated to about RM300 million, which did not include RM187 million worth of outstanding works as at end-2010. It said the project was still deemed viable and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.
'However, we believe that in a scenario where the receiver takes over management of APH, it may come up with a scheme to repay a large portion of the amount due to contractors, which would reduce the risk of a huge write-down,' it said.
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At 9.15am, Muhibbah was up one sen to RM1.53 with 3.02 million shares done. Its subsidiary Favelle Favco gained three sen to RM1.64.
Muhibbah suffered the steepest single day fall yesterday since Jan 14, 1998 in a knee-jerk reaction to the possibility that APH was facing receivership. The stock fell 20% or 38 sen to RM1.52 with 45.7 million shares done.
Some analysts viewed the selling yesterday as overdone and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.
APH, the developer and operator of the APH oil terminal in Johor, faced the prospects of receivership, news reports said. Muhibbah was awarded the marine piling and jetty works worth RM820 million. Cost escalation in 2008 led to funding issues for APH and the stalling of payments due to Muhibbah.
CIMB Equities Research had said the unpaid amount accumulated to about RM300 million, which did not include RM187 million worth of outstanding works as at end-2010. It said the project was still deemed viable and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.
'However, we believe that in a scenario where the receiver takes over management of APH, it may come up with a scheme to repay a large portion of the amount due to contractors, which would reduce the risk of a huge write-down,' it said.
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