Update TH Heavy stays in O&G fabrication, but sees FPSO as game changer

by **Cals** Thu 12 Jun 2014, 03:01

Update TH Heavy stays in O&G fabrication, but sees FPSO as game changer

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Wednesday, 11 June 2014 14:37

KUALA LUMPUR (June 11): TH Heavy Engineering Bhd will remain in the oil & gas (O&G) offshore fabrication business, but has eyed the floating production storage & offloading (FPSO) business as a 'game changer' in 2016.

"Broadly speaking, we will still remain in the fabrication business and related services," Datuk Azizan bin Abdul Rahman, the chairman of TH Heavy told reporters today after the company’s AGM today.

"The core business of the firm will still remain in fabrication, but the FPSO business is another major division within the firm," he said.

TH Heavy's managing director and CEO Nor Badli Munawir who was also present at the media briefing deemed the FPSO business as a 'game changer in 2016”.

"We will see a very drastic change in terms of our topline and also our bottomline,” he said.

Azizan said the income stream generated from the FPSO division would only contribute to TH Heavy in FY16 after the provision for upgrading works of the vessel.

Meanwhile, Nor Badli said the firm was eyeing a revenue growth of 10%-20% this year.

"In terms of topline, we think, this year, we will have an improvement of about 10% to 20%," he said.

He, however, declined to provide guidance on the firm's net profit.

According to Azizan, TH Heavy would raise funds to fund its capital expenditure (capex) for its fabrication yard and FPSO, but said the firm was still 'toying' over the best capital raising exercise option.

"There are various options that we are looking at," he said.

"We may look towards raising funds from our shareholders, but we also have other financial markets to consider."

The chairman added TH Heavy would place preference on Islamic instruments to raise capital.

Currently, TH Heavy's capex for its fabrication yard stands at circa RM90 million. For the FPSO, capex will incur an additional US$230 million to US$250 million, apart from the exisiting investment.

CEO Nor Badli said the firm's current orderbook is close to RM300 million, which will last till the middle of next year. On the other hand, TH Heavy's tenderbook hovers at around RM3 billion.

He said 'keeping fingers crossed', the firm hopes to bag six jobs that it is currently actively bidding.