KUALA LUMPUR: Market talk concerning the possible privatisation of Boustead Heavy Industries Corp Bhd (BHIC) has resulted in an increase in the stock’s price over the past couple of weeks.
Yesterday BHIC closed at RM3.85, a 6.4% increase from its Tuesday close of RM3.62, with a total of 1.2 million shares done.
While the current price is still below the counter’s 52-week high of RM4.84, the stock price has seen a gradual upward trend from early December 2011, where the share price ranged between RM2.60 and RM2.90.
According to reports, while BHIC’s parent Boustead Holdings Bhd denied talk that it was planning to privatise the former, it then emerged that Lembaga Tabung Angkatan Tentera (LTAT) could be the vehicle to be used.
LTAT’s chief executive Tan Sri Lodin Wok Kamaruddin did not dismiss the possibility of the Armed Forces Pension fund taking BHIC private. However, he added that the matter would have to be collectively deliberated on by LTAT’s board of directors.
According to BHIC’s latest annual report, LTAT holds a direct 8.15% stake in the company, and an indirect stake of 65%, via Boustead.
According to Boustead’s latest annual report, LTAT holds a 59.28% stake in the company.
While there are still questions over the possible price that BHIC might be privatised at, the company’s net assets per share as at the end of Sept last year was RM1.71. At its current share price, its historical PE ratio is 46.78 times, while its estimated PE is 124.19 times. Its current price-to-book ratio is 2.26 times. However, AmResearch noted in a research report the attractiveness of BHIC given that it is the country’s sole military yard with massive order book prospects.
While it was a tough year for BHIC last year, the company recently got a boost to its prospects when it received a letter of award from the Ministry of Defence, as announced by the company in mid-December. The letter of award is for the contract to design, construct, equip, install, commission, integrate, test and trials, and deliver six combat ships.
The contract carries a ceiling of RM9 billion, with the first ship expected to be delivered in 2017, to be followed by the other ships at six-month intervals.
However, for its 3QFY11 ended Sept 30, BHIC slipped into the red, reporting a net loss of RM2.4 million compared to a net profit of RM26.9 million for the previous year’s corresponding period. Net profit for the first nine months of FY11 also showed a year-on-year decline of 84.5% to RM9 million.
According to the notes accompanying the announcement, the loss during 3Q was due to cost overruns in certain commercial shipbuilding projects.
AmResearch has a “buy” on BHIC but adjusted its earnings forecasts for FY11 on the back of cost overruns and late delivery charges for two accommodation crane barges and deadweight oil carriers.
The research house has a fair value of RM4.30 for the stock compared with RM4.15 by consensus.
Yesterday BHIC closed at RM3.85, a 6.4% increase from its Tuesday close of RM3.62, with a total of 1.2 million shares done.
While the current price is still below the counter’s 52-week high of RM4.84, the stock price has seen a gradual upward trend from early December 2011, where the share price ranged between RM2.60 and RM2.90.
According to reports, while BHIC’s parent Boustead Holdings Bhd denied talk that it was planning to privatise the former, it then emerged that Lembaga Tabung Angkatan Tentera (LTAT) could be the vehicle to be used.
LTAT’s chief executive Tan Sri Lodin Wok Kamaruddin did not dismiss the possibility of the Armed Forces Pension fund taking BHIC private. However, he added that the matter would have to be collectively deliberated on by LTAT’s board of directors.
According to BHIC’s latest annual report, LTAT holds a direct 8.15% stake in the company, and an indirect stake of 65%, via Boustead.
According to Boustead’s latest annual report, LTAT holds a 59.28% stake in the company.
While there are still questions over the possible price that BHIC might be privatised at, the company’s net assets per share as at the end of Sept last year was RM1.71. At its current share price, its historical PE ratio is 46.78 times, while its estimated PE is 124.19 times. Its current price-to-book ratio is 2.26 times. However, AmResearch noted in a research report the attractiveness of BHIC given that it is the country’s sole military yard with massive order book prospects.
While it was a tough year for BHIC last year, the company recently got a boost to its prospects when it received a letter of award from the Ministry of Defence, as announced by the company in mid-December. The letter of award is for the contract to design, construct, equip, install, commission, integrate, test and trials, and deliver six combat ships.
The contract carries a ceiling of RM9 billion, with the first ship expected to be delivered in 2017, to be followed by the other ships at six-month intervals.
However, for its 3QFY11 ended Sept 30, BHIC slipped into the red, reporting a net loss of RM2.4 million compared to a net profit of RM26.9 million for the previous year’s corresponding period. Net profit for the first nine months of FY11 also showed a year-on-year decline of 84.5% to RM9 million.
According to the notes accompanying the announcement, the loss during 3Q was due to cost overruns in certain commercial shipbuilding projects.
AmResearch has a “buy” on BHIC but adjusted its earnings forecasts for FY11 on the back of cost overruns and late delivery charges for two accommodation crane barges and deadweight oil carriers.
The research house has a fair value of RM4.30 for the stock compared with RM4.15 by consensus.
