Company Coverage
Malaysia Marine and Heavy Engineering (MMHE MK): 2Q26: Positive Surprise From Sailaway Finalisation
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM0.38
RM0.53
+39.5%
RM0.50
Analyst
Highlights
1H26/2Q26 core earnings were materially above expectations. This was mainly due to substantial profits from the offshore segment, coinciding with the sailaway of several projects including Kasawari Carbon Capture Storage (CCS) and the Vestigo Wellhead Platforms (WHP). This demonstrates that MMHE’s ability to close out project completions has improved materially. Marine repair still appears weaker yoy on account of lower vessel repair jobs and a lack of substantial conversion jobs relative to 1H25.
2H26 will see better marine repair contributions. Despite a lower orderbook of RM4.1b (vs RM4.7b qoq), we expect marine repair to pick up traction in 2H26, on LNGC repairs and floater conversion jobs that have already begun at the JV level. Sustaining its current execution track record and building up a higher marine repair profit base are key for a re-rating. Maintain BUY with a target price of RM0.53 adjusted from RM0.50 as we roll over to 2027 horizon (0.5x P/B).
Analysis
1H26 above expectations, primarily driven by post-sailaway projects. The exceptionally strong 2Q26 showing from the offshore segment lifted 1H26 core profit, accounting for 85%/72% of our/consensus forecasts respectively. EBITDA expanded more than 2x qoq from RM38m in 1Q26 to RM80m in 2Q26, which was comparable to 4Q25’s RM71m. Malaysia Marine and Heavy Engineering’s (MMHE) project execution and ability to close out project completions has improved substantially. 2Q26 is also a rare quarter whereby the yard celebrated several offshore project sailaways at once.
Highlights
1H26/2Q26 core earnings were materially above expectations. This was mainly due to substantial profits from the offshore segment, coinciding with the sailaway of several projects including Kasawari Carbon Capture Storage (CCS) and the Vestigo Wellhead Platforms (WHP). This demonstrates that MMHE’s ability to close out project completions has improved materially. Marine repair still appears weaker yoy on account of lower vessel repair jobs and a lack of substantial conversion jobs relative to 1H25.
2H26 will see better marine repair contributions. Despite a lower orderbook of RM4.1b (vs RM4.7b qoq), we expect marine repair to pick up traction in 2H26, on LNGC repairs and floater conversion jobs that have already begun at the JV level. Sustaining its current execution track record and building up a higher marine repair profit base are key for a re-rating. Maintain BUY with a target price of RM0.53 adjusted from RM0.50 as we roll over to 2027 horizon (0.5x P/B).
Analysis
1H26 above expectations, primarily driven by post-sailaway projects. The exceptionally strong 2Q26 showing from the offshore segment lifted 1H26 core profit, accounting for 85%/72% of our/consensus forecasts respectively. EBITDA expanded more than 2x qoq from RM38m in 1Q26 to RM80m in 2Q26, which was comparable to 4Q25’s RM71m. Malaysia Marine and Heavy Engineering’s (MMHE) project execution and ability to close out project completions has improved substantially. 2Q26 is also a rare quarter whereby the yard celebrated several offshore project sailaways at once.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
RM0.38
RM0.53
+39.5%
RM0.50
Analyst
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