[MARC] MARC Ratings affirms AA-IS rating on MHB’s sukuk

MARC Ratings has affirmed its AA-IS rating on Malaysia Marine and Heavy Engineering Holdings Berhad’s (MHB) RM1.0 billion Sukuk Murabahah Programme with a stable outlook. There is no outstanding amount under the programme to date.

The rating incorporates a one-notch uplift, reflecting MHB’s membership in the Petroliam Nasional Berhad (PETRONAS) group and the expectation of continued support from the group. PETRONAS holds an indirect interest in MHB via its 51%-owned MISC Berhad, which owns 66.5% of MHB. MHB’s standalone credit profile is supported by its established track record in offshore fabrication and marine repairs, and the scale of its contracted business. The rating is moderated by MHB’s exposure to the cyclical oil and gas sector.

As at end-June 2025, MHB’s order book stood at RM5.17 billion, providing revenue visibility through 2028. In 1H2025, MHB secured two Engineering, Procurement, Construction, Installation, and Commissioning (EPCIC) contracts worth RM572 million from Vestigo Petroleum Sdn Bhd to fabricate three wellhead platforms — two to be deployed offshore Terengganu, and one offshore Sarawak.

Counterparty risk remains elevated due to the high concentration of fabrication contracts, with 56% of the heavy engineering order book tied to Petrofac International (UAE) LLC (Petrofac) and 41% to PETRONAS-related projects. Petrofac’s risk is partly mitigated by project owner, TenneT B.V. — a transmission system operator in the Netherlands and much of Germany — whose payments to Petrofac underpin its payments to MHB.

In 1H2025, MHB reported revenue of RM884.7 million, down 53% y-o-y, mainly due to lower contributions from the heavy engineering segment, as several projects neared completion while new ones were still in their early stages of execution. The lower revenue was partly offset by stronger performance from the marine segment, driven by the large number of vessel conversion and repair contracts. Operating profit came in at RM28.5 million, supported by the marine segment, while the heavy engineering segment was impacted by lower project activity. Given the current order book and project timelines, full-year 2025 revenue is expected to fall below last year’s RM3.6 billion. As of end-June 2025, cash and cash equivalents stood at RM506.5 million, while total borrowings declined to RM241.7 million, reducing the debt-to-equity ratio to 0.17x.

Amirul Rahul, +603-2717 2905/ rahul@marc.com.my
Ahmad Kamal Syauki, +603-2717 2958/ kamal@marc.com.my
Sharidan Salleh, +603-2717 2954/ sharidan@marc.com.my