RHBInvest Research

MMHE:

Sector Update

• Getting tougher to grow
• Over-dependence on Petronas heightens the concentration risk
• Keen competition in all market segments could limit its ability to penetrate new markets
• Sharp rise in material costs could erode margins for “fixed-cost” contracts
• Cyclical risks of the crude oil price could lead to projects being shelved or delayed.
• Fair value RM6.26/share

**MMHE is Bloomberg code. RHBInvest stock code is 5186 named MHB

Macro View

Inflation:

• Accelerated to 2.9% in February, pointing to elevating price pressures
• We expect the Central Bank to resume raising interest rates from Jul 2011 and the OPR will likely be raised by 50 basis points in 2H 2011 to bring it to a more neutral level of 3.25%.
• We also expect the Central Bank to raise the SRR again by another 1.0%-pt to 3.0% in its next policy meeting on 5 May.