With the business potentially at an important milestone, we thought we'd take a closer look at Muhibbah Engineering (M) Bhd.'s (KLSE:MUHIBAH) future prospects. Muhibbah Engineering (M) Bhd. provides oil and gas, marine, infrastructure, civil, and structural engineering contract works in Malaysia and internationally. On 31 December 2023, the RM577m market-cap company posted a loss of RM8.0m for its most recent financial year. As path to profitability is the topic on Muhibbah Engineering (M) Bhd's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Check out our latest analysis for Muhibbah Engineering (M) Bhd
Muhibbah Engineering (M) Bhd is bordering on breakeven, according to the 2 Malaysian Construction analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of RM51m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 57% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Muhibbah Engineering (M) Bhd's growth isn’t the focus of this broad overview, however, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before we wrap up, there’s one issue worth mentioning. Muhibbah Engineering (M) Bhd currently has a 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 in investing in the loss-making company.
Next Steps:
There are key fundamentals of Muhibbah Engineering (M) Bhd which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Muhibbah Engineering (M) Bhd, take a look at Muhibbah Engineering (M) Bhd's company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:
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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.
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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.
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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.