Muhibbah Engineering to diversify income streams (5703)

KLANG: Muhibbah Engineering (M) Bhd hopes to improve its recurring income base by intensifying its focus on build, operate and transfer projects in the oil and gas sector in the Asean region.

The group is also looking at project management contracts (PMCs) in the oil and gas sector to reduce its reliance on contracting works, said its business development director Mac Chung Jin.

"Margins for contracting works are very cyclical these days. There is currency fluctuation when you go abroad and there is also price fluctuation. When oil price goes up, everything else does, too.

"Due to that, many have started to move away from being pure contractors. There are talks by Petroliam Nasional Bhd (Petronas) to go into marginal fields, which is a good sign of positive things happening," Mac told Business Times recently.

Muhibbah Engineering has identified international partners to jointly venture into the development of marginal fields by Petronas.

For fiscal 2011, the group registered a pre-tax profit of RM114.93 million on revenues of RM1.96 billion. Most of the earnings for Muhibbah, which has an order book of RM3.1 billion, are from infrastructure construction projects.

Muhibbah is also interested in the RM61 billion refinery and petrochemical integrated development (Rapid) project in Johor, as well as oil and gas projects in Sabah.

The projects in Sabah include the oil and gas terminal at Kimanis, the Sabah-Sarawak gas pipeline, the gas-fired power plants in Kimanis and Lahad Datu, and the re-gastification plant in Lahad Datu.

"We hope to get a few packages from these projects. We have not submitted a bid but will look out for the tender documents," Mac said.

"There is a possibility that we may go slightly off of what we are doing now but we are quite bullish on what we want and where we want to be."

Overseas, Mac said the group was eyeing new markets like Myanmar, where opportunities are available in the areas of agriculture, oil and gas, tourism and telecommunication.

"Myanmar is a country where a lot of people are talking about currently and we want to jump on the bandwagon," he said.