Malaysia Marine And Heavy Engineering Holdings Berhad

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by TA
BUY – TP RM0.61

" Resilience Intact”

Considering the better results and incorporating ESG Premium of 3%, we raise our TP to RM0.61/share (previous: RM0.55/share) pegged to 0.65x CY25 P/B ratio. Following the weakness in its share price, we upgrade it from HOLD to BUY.

Analyst:
Lee Yun Leon
yllee@ta.com.my

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by MIDF
BUY – TP RM0.65

"Cost Recovery Pulled 1HFY24 Earnings to A 6-Fold Surge”

• MMHE’s 1HFY24 revenue up +21%yoy, earnings surged 6-fold; which came above expectations
• Higher earnings from recognition of cost recovery, high dry-docking and maintenance activities
• Upstream capex, stable Brent price, and carbon solution projects promising better operations in HE and Marine
• Maintain BUY, unchanged target price RM0.65

Analyst:
MIDF Research
research@midf.com.my

PETRONAS
$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)

WINDING UP / RECEIVER & MANAGER / RESTRAINING ORDER / SPECIAL ADMINISTRATORMEMBER'S VOLUNTARY WINDING UP FOR WHOLLY OWNED AND DORMANT SUBSIDIARIES

Change in Boardroom - CAPTAIN RAJALINGAM A/L SUBRAMANIAM

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by TA
Buy – TP RM0.55

“Tailwind from Another Offshore Substation Project"

MHB has secured a second subcontract for an OSS HVDC platform worth In RM1.5bn. The project’s duration is approximately 36 months and is estimated to generate RM15.0mn PBT throughout the contract period. We are cautiously optimistic about the job win as it provides the group with valuable experience in the OSS segment. However, MHB may face challenges in the form of execution risks and cost overruns. No change to our earnings forecasts. Following the recent weakness in its share price, MHB is upgraded to Buy with an unchanged TP of RM0.55/share pegged to 0.65x CY25 P/B ratio.

Analyst:
Ong Tze Hern
thong@ta.com.my

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by RHB
Buy – TP RM0.60

“Another Wind Project In The Bag; Keep BUY"

Keep BUY and MYR0.60 TP, 24% upside. We are positive on Malaysia Marine & Heavy Engineering’s latest MYR1.5bn contract win, which brings its orderbook to c.MYR6.9bn. This marks the group’s second windfarm offshore substation (OSS) contract, following the first one secured in Nov 2023. While execution and cost management are crucial for project delivery, we believe MMHE will continue to benefit from the growing windfarm segment.

Analysts:
Miza Izaimi
miza.izaimi@rhbgroup.com
Sean Lim, CFA
sean.lim@rhbgroup.com

OTHERSMHB Expands its Footprint in Clean Energy by Securing Second Offshore Wind Project to Build OSS HVDC Platform in Support of TenneTs 2GW Programme in the Netherlands

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by TA
Hold – TP RM0.55

“No More Cost Provisions?"

Considering the better earnings prospect, we raise our P/B valuation for MHB from 0.6x to 0.65x, hence raising our TP to RM0.55/share (previous: RM0.51/share) pegged to 0.65x CY25 P/B ratio. Maintain Hold.

Analyst:
Ong Tze Hern
thong@ta.com.my

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by RHB
Buy – TP of MYR 0.60

“A Good Start To The Year; Keep BUY”

Malaysia Marine & Heavy Engineering’s results were broadly in line with expectations, as we anticipate the group to record stronger quarters ahead. We remain optimistic on the company's outlook as it phases out older projects and undertakes new ones, which we believe have more favourable terms.

Analyst(s):
Miza Izaimi
miza.izaimi@rhbgroup.com
Sean Lim, CFA
sean.lim@rhbgroup.com

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

Change in Boardroom - ENCIK AZHAR BIN NOORDIN

Change in Boardroom - PUAN MARIAH BINTI MOHAMAD SAID

Change in Boardroom - ENCIK SHAMSUL BAHAR AHAMAD ZAINAL BADRI

Change in Audit Committee - PUAN MARIAH MOHAMAD SAID

Change in Nomination and Remuneration Committee - PUAN MARIAH MOHAMAD SAID

Change in Risk Committee - ENCIK AZHAR NOORDIN

General Meetings: Outcome of Meeting

Change in Boardroom - MISS GLADYS LEONG

Change in Audit Committee - MISS GLADYS LEONG

Change in Nomination and Remuneration Committee - MISS GLADYS LEONG

OIL & GAS
$KLSE-WASCO $MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD) $MISC / 3816 (MISC BERHAD)
Research by HLIB
Overweight (Maintain)

“Scaling the CCUS industry”

Under IEA’s NZE scenario, total scope 1 and 2 emissions from O&G operations decline by 60% between 2022 and 2030. One of the five levers to achieve the target is by deploying CCUS. Although operational CCUS projects would only be able to fulfil 25% of the required 1Gt CO2 p.a. to meet the NZE scenario, its deployment is set to gather pace as capture capacity is expected to jump 12-fold if all announced projects in the pipeline come to fruition by 2030. Malaysia is ideal to be developed into a regional CCUS hub due to its massive 2.4GT of potential storage capacity. Potential beneficiaries of CCUS deployment include MISC, MHB and Wasco.

Analyst(s):
Brian Chin
brianchy@hlib.hongleong.com.my

Annual Report & CG Report - 2023

General Meetings: Notice of Meeting

OIL & GAS
$YINSON / 7293 (YINSON HOLDINGS BERHAD) $MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD) $MISC / 3816 (MISC BERHAD)
Research by AMMB
Overweight (Maintained)

"Potential for better setting from Brazil FPSO supply side woes"

Another punch to the gut for Petrobras as floater companies continues to shy away. Brazil’s national oil and gas company announced that it has pushed back the submission date by as much as 4 months for proposals of 3 key floating production storage and offloading (FPSO) tenders: SEAP-1 and SEAP-2 for the Sergipe-Alagoas tender as well as the Barracuda-Catinga field. This is the third delay since our report (Tender Submission Delayed for Sergipe-Alagoas Basin Floaters) back in October 2023. The rationale for the delay is to improve bidding rules to enhance the commercial viability of the projects.

Analyst(s):
Muhammad Nuur Ashman
muhammad-nuur-ashman.a@ambankgroup.com

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by MIDF
Maintain Neutral - Unchange TP RM0.51

"FY23 Earnings Impacted by Cost Provision for HE Projects"

• MMHE’s 4QFY23 surged +164%yoy to RM1.12b, but earnings down -78%yoy to RM6m (within expectations)
• Slow dry-docking demand, more cost provision for HE projects pulled earnings down to a deficit for FY23
• Key risks moving forward include high raw material prices, tight competition for dry-docking
• Maintain NEUTRAL with TP of RM0.51

Analyst:
MIDF Research
research@midf.com.my

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by RHB
Buy (Maintained) - TP of MYR0.57

"Cost Recovery Claims Coming In; Keep BUY"

Malaysia Marine & Heavy Engineering’s results came in below expectations as the group is still incurring additional cost provisions for an ongoing project. However, MMHE turned into the black following the recognition of cost recovery claims. Going forward, we believe its strong pipeline coupled with ongoing efforts of its recovery claims, will ensure profitability.

Analyst:
Miza Izaimi
miza.izaimi@rhbgroup.com

Sean Lim, CFA
sean.lim@rhbgroup.com

$MHB / 5186 (MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD)
Research by TA
Hold - TP of RM0.51

"Returning to the Black from Partial Cost Recovery"

Malaysia Marine and Heavy Engineering Holdings Bhd’s (MHB) 4QFY23 results came in below expectations. FY23 core net loss was RM463.8mn (FY22: RM44.7mn core profit). We forecasted a core loss of RM398.9mn while the consensus forecast was core loss of RM132.3mn. The earnings miss was largely attributed to lower-than-expected cost recovery.

Analyst:
Ong Tze Hern
thong@ta.com.my