MHB (5186) : Alliance Research maintains Fully Valued on MMHE
KUALA LUMPUR: Alliance Research has maintained its Fully Valued rating on Malaysia Marine and Heavy Engineering (MMHE) with a target price of RM1.65 based on 18 times FY15F PE on the back of weak earnings visibility.
In a note on Thursday, the research house said MMHE's net profit came in at RM113mil.
"We expect 4Q earnings to be seasonally stronger. Revenue fell 45%on-quarter as the Tapis-R platform and KBB topsides had sailed away. Bottomline was also boosted by investment tax allowances for expenditure on its yard optimisation programme," it said.
It noted that MMHE’s latest orderbook - including RM323mil of new jobs secured this week - stands at RM1.7bil.
"This represents less than 1x book-to-bill ratio and will be exhausted by mid-2016. This will result in FY15 and FY16 earnings contracting on-year. For now, we will stick to RM2bil new orders assumption in FY15 to secure our FY16F earnings," it said.
Alliance added that the fabrication scene in Malaysia has become increasingly competitive as Petronas now welcomes foreign competitors.
MMHE’s contract wins from Malaysia will shrink ahead as the group takes on smaller projects and more sub-contract roles, it noted.
http://www.thestar.com.my
KUALA LUMPUR: Alliance Research has maintained its Fully Valued rating on Malaysia Marine and Heavy Engineering (MMHE) with a target price of RM1.65 based on 18 times FY15F PE on the back of weak earnings visibility.
In a note on Thursday, the research house said MMHE's net profit came in at RM113mil.
"We expect 4Q earnings to be seasonally stronger. Revenue fell 45%on-quarter as the Tapis-R platform and KBB topsides had sailed away. Bottomline was also boosted by investment tax allowances for expenditure on its yard optimisation programme," it said.
It noted that MMHE’s latest orderbook - including RM323mil of new jobs secured this week - stands at RM1.7bil.
"This represents less than 1x book-to-bill ratio and will be exhausted by mid-2016. This will result in FY15 and FY16 earnings contracting on-year. For now, we will stick to RM2bil new orders assumption in FY15 to secure our FY16F earnings," it said.
Alliance added that the fabrication scene in Malaysia has become increasingly competitive as Petronas now welcomes foreign competitors.
MMHE’s contract wins from Malaysia will shrink ahead as the group takes on smaller projects and more sub-contract roles, it noted.
http://www.thestar.com.my
