BHIC, PDZ, MITRA
Charter Segment Drags BHIC’s 3Q14 Earnings
For the third quarter ended 30 September, Boustead Heavy Industries Corporation (BHIC) reported a 34.8 percent contraction in net profit to RM10.4 million, due to share of losses from associates and higher losses reported from the chartering segment.
Despite recording a higher income contribution, the chartering segment continued to report a loss due to high operating costs and scheduled routine dry docking expenses incurred on its chemical tankers.
For the nine-month period, the group recorded a 2.6 percent and 28.5 percent fall to RM212.8 million and RM22.3 million in top and bottom lines respectively. The firm noted that its JV companies in the heavy engineering segment posted a higher share of profits, primarily due to the helicopter maintenance contract secured from the government.
Significance: Going forward, the group expects the heavy engineering segment to drive the firm’s performance through defence related maintenance, repair and overhaul activities, coupled with positive progress on the Belum field topside construction contract for the Murphy’s Sarawak gas development project.
Mitrajaya Bags RM402m Job
Mitrajaya Holdings’ wholly-owned subsidiary, Pembinaan Mitrajaya, has been awarded a RM401.9 million property job by Sunrise Pioneer, a member of UEM Sunrise Group.
The contract entails the proposed execution and completion of main buildings and external works of two blocks of condominiums at Mont’ Kiara, Kuala Lumpur. Expected to be completed by 2 August 2017, the project is expected to contribute to future earnings.
Meanwhile, Hong Leong Investment Bank (HLIB) has recently initiated coverage on the group, saying that the firm offered superior earnings growth at cheap valuations. The research house also noted that Mitrajaya, which began as a construction company, has since ventured into other areas such as property development and optical healthcare.
Significance: HLIB has places a ‘Buy’ call on Mitrajaya with a target price of RM1.52 that reflected a 55 percent upside based on 10 times of FY15 earnings. Prospects of the firm look positive, with RM2 billion outstanding tender as the group aims to hit an orderbook target of RM1.5 billion by year-end.
PDZ Plans Kazakhstan LPG Venture
Shipping company PDZ Holdings has proposed to set up a liquefied petroleum gas (LPG) production plant in Kazakhstan and launch itself into the cooking gas business in a US$205 million (RM656 million) deal.
To fund the new venture, the group intends to raise at least RM672 million via the sale of new shares and a rights issue with warrants. While the final cost of the deal is still subjected to negotiation and adjustment, the consideration will be payable via the combination of US$125million cash and the issuance of redeemable convertible preference shares (RCPS) for the value of US$80million.
Under the agreement with Ken Makmur Holdings, PDZ is authorised to carry out the construction of the LPG plant, to be completed within 36 months after a date to be mutually agreed on.
Significance: The proposed LPG production provides the PDZ with an opportunity to diversify and expand its source of income. The group believes that the additional revenue from the venture will enhance the company’s profitability and returns on shareholders’ funds.
http://www.sharesinv.com
