Malaysia Marine and Heavy Engineering Holdings Bhd (Oct 19, RM6.00)
Maintain buy at RM5.95 with fair value of RM9.90: We maintain our “buy” call on Malaysia Marine and Heavy Engineering Holdings (MHB) with an unchanged fair value of RM9.90 per share, based on an FY12F price-earnings ratio (PER) of 25 times — a 15% premium to Kencana Petroleum Bhd’s 2007 peak of 22 times.
MHB confirmed a Bloomberg report on Tuesday that it will be awarded a contract from ExxonMobil Corp to fabricate facilities for its Telok gas development in Malaysia. Production at Telok is expected to begin in 1Q 2013 to provide additional gas supply for the country’s power and industrial needs.
MHB’s scope of work includes the procurement, fabrication, load-out, offshore hook-up and commissioning of two topsides and corresponding two jackets for the platforms. The four-legged jackets with piles and conductors have an estimated weight of 3,900 tonnes each with pre-installed risers.
The Telok A and Telok B are gas satellite platforms with an estimated topside weight of 1,750 tonnes and 1,650 tonnes respectively. The gas production from these platforms will be tied back to the existing Guntong E gas platform. MHB did not provide any estimates for the contract value of this project but Bloomberg had reported that it could be over RM236 million.
The Telok project was announced in January by the prime minister, indicating that ExxonMobil and Petronas Carigali Sdn Bhd plan to invest over RM10 billion to rejuvenate mature facilities and undertake enhanced oil recovery activities in the Tapis and the Telok gas fields off Terengganu. Recall that ExxonMobil has already committed up to US$2.1 billion (RM6.5 billion) to rejuvenate seven oilfields in Malaysia — Tapis, Seligi, Guntong, Semangkok, Irong Barat, Tabu and Palas.
The contract value for the project is likely to be small compared with an upcoming fabrication job for the Tapis central processing platform, potentially around RM1.5 billion. With an order book of RM3.1 billion currently, MHB has secured RM1.2 billion in fresh contracts this year. As such, we maintain FY11F to FY13F earnings. The stock currently trades at an attractive FY12F PER of 15 times, below Dialog Group Bhd’s 20 times. — AmResearch, Oct 19
Maintain buy at RM5.95 with fair value of RM9.90: We maintain our “buy” call on Malaysia Marine and Heavy Engineering Holdings (MHB) with an unchanged fair value of RM9.90 per share, based on an FY12F price-earnings ratio (PER) of 25 times — a 15% premium to Kencana Petroleum Bhd’s 2007 peak of 22 times.
MHB confirmed a Bloomberg report on Tuesday that it will be awarded a contract from ExxonMobil Corp to fabricate facilities for its Telok gas development in Malaysia. Production at Telok is expected to begin in 1Q 2013 to provide additional gas supply for the country’s power and industrial needs.
MHB’s scope of work includes the procurement, fabrication, load-out, offshore hook-up and commissioning of two topsides and corresponding two jackets for the platforms. The four-legged jackets with piles and conductors have an estimated weight of 3,900 tonnes each with pre-installed risers.
The Telok A and Telok B are gas satellite platforms with an estimated topside weight of 1,750 tonnes and 1,650 tonnes respectively. The gas production from these platforms will be tied back to the existing Guntong E gas platform. MHB did not provide any estimates for the contract value of this project but Bloomberg had reported that it could be over RM236 million.
The Telok project was announced in January by the prime minister, indicating that ExxonMobil and Petronas Carigali Sdn Bhd plan to invest over RM10 billion to rejuvenate mature facilities and undertake enhanced oil recovery activities in the Tapis and the Telok gas fields off Terengganu. Recall that ExxonMobil has already committed up to US$2.1 billion (RM6.5 billion) to rejuvenate seven oilfields in Malaysia — Tapis, Seligi, Guntong, Semangkok, Irong Barat, Tabu and Palas.
The contract value for the project is likely to be small compared with an upcoming fabrication job for the Tapis central processing platform, potentially around RM1.5 billion. With an order book of RM3.1 billion currently, MHB has secured RM1.2 billion in fresh contracts this year. As such, we maintain FY11F to FY13F earnings. The stock currently trades at an attractive FY12F PER of 15 times, below Dialog Group Bhd’s 20 times. — AmResearch, Oct 19
