Malaysia Marine & Heavy Engineering Holdings Bhd's (MMHE) robust order book and solid revenue growth across its heavy engineering and marine segments as indicators of future growth have prompted both RHB Investment Bank Bhd (RHB Research) and MIDF Amanah Investment Bank Bhd (MIDF Research) to maintained a BUY call on the company.

The optimistic calls have revised MMHE's target price upward to range between 62 sen and 72 sen, a potential upside of 43% to 63.6%.

For the first nine months of MMHE's financial year 2024 (9M24), its core earnings have rose substantially as from a deficit of RM488.6 million in 9M23 to RM139.5 million in 9M24, a six-fold increase that is driven by a 27.4% year-on-year increase in revenue, reaching RM2.19 billion.

While MMHE's order book remains robust, with current orders at RM5.3 billion, and its revenue outlook is buoyed by rising upstream activities, there are still risks remain including potential competition with regional shipyards, geopolitical instability and colder-than-expected weather that would be affecting maintenance demand.

Nonetheless, both research houses have adjusted its earnings forecasts upward, with RHB Research raising its FY24-FY26 earnings forecast by 13%-14% due to improved heavy engineering margins. In comparison, MIDF Research revises its FY24-FY25 earnings forecast upward by 40% and 11%, taking into account new offshore wind projects and increased capital expenditure for upstream activities.

Looking forward, MMHE's strategy to balance traditional and renewable energy project contracts could shield it from market volatility, particularly as the group continues expanding into low-carbon solutions and decarbonisation efforts in the marine sector.

The company's future growth trajectory remains positive, supported by stable order visibility through 2028 and continued demand for LNG and other upstream oil and gas activities.