Hot Stock MHB rises to 8-mth high after Affin upgrade

by **Cals** Tue 22 Apr 2014, 19:49

Hot Stock MHB rises to 8-mth high after Affin upgrade

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Tuesday, 22 April 2014 12:20

KUALA LUMPUR (April 22): Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) rose actively in morning trades to become the fifth top gainer after Affin Research upgraded the stock last week.

At 11.51 am, MHB rose 19 sen or 5% to RM4.09 on trades of 1.126 million shares. This level is the highest in eight months.

On April 16, Affin Research said it had upgraded the stock to “add” from “reduce”, with raised target price of RM4.20 from RM3.30 per share.

The research house said it expected upstream oil and gas engineering contract flow to pick up in the second half of 2014 or first half of 2015, and it believed MHB “is poised to benefit from the upcoming CPP/platform jobs in view of its strategically located modern yard and its strong technical partner Technip.

Technip is one of the four local contractors under Petroliam Nasional Bhd’s five-year design and engineering service umbrella contract.

Affin, in its research report on MHB, also believes that MHB is well positioned to benefit from Pengerang Integrated Complex (PIC) in Johor project due to the strategic location of its yard in Pasir Gudang and the fact that Technip is the front-end engineering design contractor for the Rapid project.

The PIC consists of the refinery and petrochemical integrated development (Rapid) and other associated facilities estimated to cost RM87.5 billion.

“In view of the improving business prospects, we have raised our 2015 and 2016 contract win forecast to RM3.3 billion-RM3.5 billion (from RM3 billion) and raised our 2016 earnings per share forecast by 6.6%.

“We raise our target price to RM4.20 (from RM3.30) based on a higher 21 times calendar year 2015 price-earnings ratio (from 18 times 2014 PER)….Upgrade to add from reduce,” it said.