Published: Wednesday June 27, 2012 MYT 8:42:00 AM
Updated: Wednesday June 27, 2012 MYT 8:43:10 AM
CIMB Research downgrades Muhibbah to trading sell
KUALA LUMPUR: CIMB Equities Research has downgraded Muhibbah Engineering from a Trading Buy to a Trading Sell on expectations the latter would have to make a provision for Asian Petroleum Hub's (APH) bad debts this year.
The research house said on Wednesday the expectations for such a provision have risen as CIMB Bank is withdrawing its support for the restructuring of the APH project.
“This is a negative surprise and resolution efforts from this point on are likely to be protracted,” it said.
CIMB Research said the group may turn in losses for FY12 if the estimated RM400mil provisions are made. But the quantum of provisions could be lower due to adjustments.
“We slash our target price as we now apply our unchanged 40% RNAV discount to the worst-case RNAV. This news is a derating catalyst and sparks a downgrade from Trading Buy to Trading Sell. Switch to Mudajaya,” it said.