KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) has far exceeded the target price of RM4.20 projected by MIDF Research upon listing on the Main Market of Bursa Malaysia yesterday.
The company’s share rallied to a peak of RM4.62 and settled at RM4.60 at mid-day. A total of 6.91 million shares were transacted at the opening bell.
“Being a project-based company, contract timing is vital as the inability to match project completions with new commencements could result in volatile earnings,” said MIDF Research in a research note yesterday.
According to the research house, MHB’s total major orderbook which stands at RM5.9 billion currently, will last only until next year while its tender book hovers around RM9 billion with a mix of domestic and foreign tenders.
It highlighted four new potential contract awards that would benefit the company as well – namely the Malikai deepwater field floating production system (FPS), Enhanced Oil Recovery (EOR) contracts, Turkmenistan Block 1 Phase 2 project, and the liquefied natural gas (LNG) regasification .
“The operators have decided that a Tension Leg Platform (TLP) FPS will be used in the Malikai field. We view MHB as the top candidate to construct the TLP as it is the only fabricator in Malaysia with experience in building deepwater FPSs,” it said.
It expects the Malikai TLP job to contribute RM6 billion to MHB’s orderbook.
On the Turkmenistan Phase 2 project, it said the fact that RM110 million from the initial public offering (IPO) proceeds is to be channeled to the Turkmenistan yard, is an indication that the project is in the pipeline.
“We reckon the project could add as much as RM8 billion to MHB’s orderbook,” MIDF Research said.
Meanwhile, MIDF Research believes contract awards from the EOR project for the fabrication of jackets, topsides and a central processing platform, could add RM1 billion to the company’s orderbook.
Additionally, MHB as the front runner for vessel conversion jobs, plans for an onshore regasification facility, with an offshore LNG storage vessel which could add RM100 million to its orderbook.
On mergers and acquisitions, under the Entry Point Projects (EPPs) for the oil and gas sector, MIDF Research says, MHB is likely to become one of the ‘anchors’ upon consolidation of the local oil field service industry.
“The consolidation
exercise is seen to help
elevate the capabilities of local oil field service companies, thus increasing their likelihood of winning major contracts locally and overseas. It will help reduce the dependency on Petronas contracts as well,” it added. — Bernama