Friday, November 18, 2011

AmResearch maintains Buy on MMHE unch FV7.40

KUALA LUMPUR (Nov 18): AmResearch reiterates its Buy recommendation on Malaysia Marine & Heavy Engineering Holdings (MMHE) with an unchanged fair value of RM7.40 a share.

It said on Friday, the FV of RM7.40 was based on an FY12F PE of 22 times, which is at parity to Kencana Petroleum's peak of 22 times in 2007.

'We maintain MMHE's 9MFY11F net profit of RM236 million as 3QCY11 net profit of RM80 million is in line with our forecast.

'On an annualised basis, the 6MFY Dec 2011 net profit of RM159 million is 1% above our forecast,' it said.

AmResearch estimates that the group's order book rose to RM3.6 billion (from RM2.9 billion in the previous quarter) largely due to'' the recently awarded Tapis contract from ExxonMobil to build and install an integrated offshore platform deck called Tapis R and two inter-platform decks coupled with a RM236 million Telok fabrication job.

AmResearch said it understands that the Tapis contract value of RM1.5bil is 7% higher than the earlier announcement.

The research house remains sanguine about MMHE's re-rating prospects. The stock currently trades at an FY12F PE of 18 times, which is below the 22 times for Dialog Group and Bumi Armada.

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