HwangDBS maintains MMHE target price

Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) could still be retained as the fabricator of the Malikai deepwater field, says HwangDBS Vickers Research Sdn Bhd.

This is given MMHE's position as Petronas' fabrication arm and the only deepwater-capable fabricator in Malaysia, it said in a research note today.

However, it added, timing remains a critical issue.

It was reported that the project operators of the Malikai deepwater field are contemplating whether to maintain MMHE as the preferred fabricator for the field's tension-leg wellhead platform (TLP).

The TLP contract is currently in a re-bid phase. The final investment decision for Malikai will come by year-end.

HwangDBS had previously highlighted that the delay is imminent and consensus financial year 2012 earnings forecast could be off by 18 per cent.

There has not been any major order book replenishment this year. The outstanding order book has dwindled from RM5.9 billion in June 2010 to RM3.1 billion as at March 2011.

HwangDBS said it has only factored in RM1.5 billion and RM4 billion new revenue recognition in financial year 2011 and 2012, respectively, which MMHE is still on track to achieve.

"Therefore, we maintain our earnings forecast at this juncture," it added.

HwangDBS has reiterated its fully valued call and RM6.90 target price on MMHE. -- Bernama