Friday, July 15, 2011

Muhibbah slips to lowest since November

KUALA LUMPUR: MUHIBBAH ENGINEERING (M) BHD []'s share price has slumped to the lowest since November 2010, hitting a low of RM1.25 on Friday, July 15 as recent gains were wiped out following concerns of its exposure to the Asia Petroleum Hub (APH), which was reported to be in receivership.

At the midday break, it was down two sen to RM1.25. There were 472,600 shares done at prices ranging from RM1.24 to RM1.28.

The FBM KLCI lost 4.59 points to 1,575.25. Turnover was 308.54 million shares valued at RM482.85 million. Declining stocks beat advancers 346 to 171 while 312 counters were unchanged.

CIMB Research has a technical Sell call on Muhibbah at RM1.27 at which it is trading at a FY12 price-to-earnings of 6.4 times and price-to-book value of 1.1 times.

The research house said Muhibbah violated its wedge support few days ago and this is a concern and 'the breakdown suggests that prices failed to bounce back above its 200-day SMA'.

CIMB Research said as the MACD stays deep in the dungeon, 'we doubt any rebound is sustainable'.

To recap, on June 28 Muhibbah managing director Mac Ngan Boon said he believed it will not have to write down the RM300 million in outstanding payments due from its major client APH

He then said APH was actively speaking to potential investors and hoped for a resolution "soonest".

"We do not believe there will be a write down. We believe there are other solutions," Mac assured shareholders after its AGM.

Recent news said APH was placed under receivership by CIMB Bank Bhd mainly because the former was unable to bring in other investors to help fund the development and to repay its borrowings.

APH is the developer and operator of the APH oil terminal in Johor and had awarded Muhibbah the marine piling and jetty works worth RM820 million.

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