MARC Ratings has affirmed the AA-IS rating for Malaysia Marine and Heavy Engineering Holdings Berhad’s (MHB) RM1b Sukuk Murabahah Programme, maintaining a stable outlook. The rating benefits from a one-notch uplift due to MHB’s affiliation with the Petroliam Nasional Berhad (PETRONAS) group, which is expected to continue its support. PETRONAS holds an indirect stake in MHB through its 51% ownership of MISC Berhad, which owns 66.5% of MHB.
MHB’s credit profile is bolstered by its established expertise in offshore fabrication and marine repairs, alongside a substantial order book valued at RM5.17b as of June 2025, ensuring revenue visibility until 2028. However, the company’s exposure to the cyclical oil and gas sector moderates the rating.
In the first half of 2025, MHB secured two significant contracts worth RM572m from Vestigo Petroleum Sdn Bhd for the fabrication of three wellhead platforms. Despite these contracts, MHB’s revenue for the period dropped by 53% year-on-year to RM884.7m, attributed to reduced contributions from the heavy engineering segment. This decline was partially offset by robust performance in the marine segment, which saw an increase in vessel conversion and repair contracts.
Counterparty risk remains a concern, with 56% of the order book linked to Petrofac International (UAE) LLC and 41% to PETRONAS-related projects. However, Petrofac’s risk is mitigated by the involvement of TenneT B.V., a transmission system operator in Europe, which underpins payments to MHB.
Looking ahead, MHB’s full-year revenue for 2025 is anticipated to fall short of the previous year’s RM3.6b, given current project timelines. As of June 2025, MHB’s cash reserves stood at RM506.5m, with total borrowings reduced to RM241.7m, resulting in a debt-to-equity ratio of 0.17x.
