By KINIBIZ
Photo: Chad Teer via wikimedia.org
The US$775 million (RM2.4 billion) contract from Sabah Shell Petroleum Co Ltd secured by Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) and its joint venture partner, Technip Geoproduction (M) Sdn Bhd— to build a tension leg platform for the Malikai deep water oilfield— has effectively reversed MMHE ‘s order book decline.
To recap, the last time MMHE bagged a significant contract was in early November 2011, when it won a RM1.4 billion contract for the fabrication of an off shore platform for ExxonMobil Exploration and Production Malaysia Inc.
Nevertheless despite bagging the large job, the company’s stock closed unchanged at RM4.17 on Wednesday, testing its 52 week low of RM4.15.
This is despite the company’s order book getting a shot in the arm. According to TA Securities MMHE’s order book after the recent contract has ballooned to RM4.6 billion from RM2.24 billion previously.
The uninspiring showing could be due to the market expecting the award and the analyst reports which were lukewarm on MMHE’s prospects.
“This project is much welcome after an extended dry spell for MMHE, whose order book had been shrinking since the company’s listing in Oct 2010… MMHE needs to win and deliver more projects in order to ensure a sustained earnings growth and excite the market after the project delays and provisions in FY12,” CIMB Investment Bank said in a research report.
The sentiment is understandable. Last year MMHE faced problems with the fabrication of the Gumusut-Kakap platform, while the company’s 3Q net profit in FY2012 crashed 90% due to provisions made for the Cendor floating production, storage and offloading (FPSO) conversion project.
For its third quarter ended September 2012, MMHE posted a pre-tax profit of RM10.25 million on the back of RM841.73 million in revenue. Earnings per share for the three months in review was a mere half a sen.
In its notes which accompany its financials, MMHE said, “The group registered lower profit before taxation of RM10.2 million in the current quarter against the preceding quarter’s of RM60.5 million.
“The current results were lower due to provisions for higher than expected expenses incurred by an on-going conversion project and from the share of losses arising from a jointly controlled entity’s performance,” MMHE said.
Much of the disappointment with MMHE, which has its mainstay in the oil and gas business, is that it is a 66.5% unit of MISC Bhd, the national carrier controlled by state controlled oil major Petroliam Nasional Bhd or Petronas.
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