KUALA LUMPUR (Feb 22): HwangDBS Vickers Research (HDBSVR) said Malaysia Marine and Heavy Engineering Holdings Bhd’s (MMHE) earnings came in at RM46.4 million (down 42% on-quarter, down 65% on-year), taking 9MFY11 profit to RM205.6 million.
It said on Wednesday the earnings were slightly below its expectation but far below consensus’.
“4Q11 revenue was RM716.1 million (up 55% on-quarter, -46% on-year), while EBIT was RM52.9 million (-38% on-quarter, -53% on-year). EBIT margin normalised to 7.4% in the quarter (versus 18.3% in 3Q11 due to provision reversal).
“Also, contribution from its JV in Turkmenistan dived to RM1.1 million (from RM15.4 million in 3Q11) because the project there is in advanced stage,” it said.
HDBSVR said thanks to RM1.6 billion new contracts awarded by ExxonMobil in Oct-November 2011, MMHE’s order book increased to RM3.1 billion from RM1.9 billion in September 2011.
“Nevertheless, delays at Gumusut Kakap project could hinder its chances of securing more contracts. Meanwhile, the Sime Darby yard acquisition is delayed again, to 2Q12. Its yard optimisation program is also under review, which would have an impact on investment tax allowance. We have not imputed contribution from the new yard pending more details upon conclusion of the acquisition,” it said.
“Our TP is nudged down to RM4.75 (pegged to 22 times FY12 EPS) after our earnings downgrade for lower order win assumption. We remain cautious of MMHE’s earnings outlook given the slow order book replenishment. There is no sight of major order wins in the near term, as Malikai and Turkmenistan phase 2 projects may not materialise this year. MMHE’s valuation is expensive at 26 times FY12 EPS versus its Singaporean peers’ 14 times,” it said.
It said on Wednesday the earnings were slightly below its expectation but far below consensus’.
“4Q11 revenue was RM716.1 million (up 55% on-quarter, -46% on-year), while EBIT was RM52.9 million (-38% on-quarter, -53% on-year). EBIT margin normalised to 7.4% in the quarter (versus 18.3% in 3Q11 due to provision reversal).
“Also, contribution from its JV in Turkmenistan dived to RM1.1 million (from RM15.4 million in 3Q11) because the project there is in advanced stage,” it said.
HDBSVR said thanks to RM1.6 billion new contracts awarded by ExxonMobil in Oct-November 2011, MMHE’s order book increased to RM3.1 billion from RM1.9 billion in September 2011.
“Nevertheless, delays at Gumusut Kakap project could hinder its chances of securing more contracts. Meanwhile, the Sime Darby yard acquisition is delayed again, to 2Q12. Its yard optimisation program is also under review, which would have an impact on investment tax allowance. We have not imputed contribution from the new yard pending more details upon conclusion of the acquisition,” it said.
“Our TP is nudged down to RM4.75 (pegged to 22 times FY12 EPS) after our earnings downgrade for lower order win assumption. We remain cautious of MMHE’s earnings outlook given the slow order book replenishment. There is no sight of major order wins in the near term, as Malikai and Turkmenistan phase 2 projects may not materialise this year. MMHE’s valuation is expensive at 26 times FY12 EPS versus its Singaporean peers’ 14 times,” it said.
