Yahoo Finance Muhibbah Engineering (M) Bhd. (KLSE:MUHIBAH) About To Shift From Loss To Profit
We feel now is a pretty good time to analyse Muhibbah Engineering (M) Bhd.'s (KLSE:MUHIBAH) business as it appears the company may be on the cusp of a considerable accomplishment. Muhibbah Engineering (M) Bhd. provides oil and gas, marine, infrastructure, civil, and structural engineering contract works in Malaysia and internationally. With the latest financial year loss of RM18m and a trailing-twelve-month loss of RM13m, the RM540m market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Muhibbah Engineering (M) Bhd's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Muhibbah Engineering (M) Bhd
According to the 2 industry analysts covering Muhibbah Engineering (M) Bhd, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of RM25m in 2023. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 74%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Muhibbah Engineering (M) Bhd's upcoming projects, however, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Muhibbah Engineering (M) Bhd is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Muhibbah Engineering (M) Bhd's case is 43%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Muhibbah Engineering (M) Bhd, so if you are interested in understanding the company at a deeper level, take a look at Muhibbah Engineering (M) Bhd's company page on Simply Wall St. We've also put together a list of key aspects you should look at:
Valuation: What is Muhibbah Engineering (M) Bhd worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Muhibbah Engineering (M) Bhd is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Muhibbah Engineering (M) Bhd’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.