KUALA LUMPUR: AmResearch is maintaining its Hold rating on BOUSTEAD HEAVY INDUSTRIES CORP [] Bhh (BHIC) with an with an unchanged fair value of RM4.40/share, based on a FY10F PE of 12x at a 10% premium to the stock's three-year average of 11x.
In a research note issued on Monday, Aug 16, the research house said this implied a 20% discount to its unchanged Sum-of-Parts valuation of RM5.50/share.
BHIC announced last Friday its 60%-owned Boustead DCNS Naval Corp Sdn Bhd was awarded a contract from the government to provide in-service support maintenance services for two Scorpene submarines.
'Contract value is worth RM1.3bil comprising of 193 million euros (RM791mil) for procurement of material and equipment and RM532mil for local content. This is higher than the earlier indicative 'ceiling price' of RM600mil mentioned in the Government's letter of intent back in June last year,' it said.
AmResearch said this was in line with its forecast assumption of RM265mil annually as highlighted in its earlier reports.
'As the six-year contract is expected to expire in Nov 30, 2015, we expect the recognition of 10-months of progress work starting on Dec 1, 2009 to materialise in 3QFY10,' it said.
In a research note issued on Monday, Aug 16, the research house said this implied a 20% discount to its unchanged Sum-of-Parts valuation of RM5.50/share.
BHIC announced last Friday its 60%-owned Boustead DCNS Naval Corp Sdn Bhd was awarded a contract from the government to provide in-service support maintenance services for two Scorpene submarines.
'Contract value is worth RM1.3bil comprising of 193 million euros (RM791mil) for procurement of material and equipment and RM532mil for local content. This is higher than the earlier indicative 'ceiling price' of RM600mil mentioned in the Government's letter of intent back in June last year,' it said.
AmResearch said this was in line with its forecast assumption of RM265mil annually as highlighted in its earlier reports.
'As the six-year contract is expected to expire in Nov 30, 2015, we expect the recognition of 10-months of progress work starting on Dec 1, 2009 to materialise in 3QFY10,' it said.
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