MHB’s 1QFY12 results were within our expectations,
although these were below consensus. Our estimates
were lower as we have become less bullish on the company after it encountered project delivery delays in the last few quarters. Going
forward, we expect a stronger 2Q and 3Q since O&G activities in Malaysia usually
peak during these quarters as weather conditions improve and Petronas and its
PSC contractors bolster spending. Maintain Neutral for now.
Within anticipation.
Although MHB’s 1QFY12 results were below
consensus expectations, the numbers were
nevertheless within our estimates, making up 19% and 21% of the respective FY12 forecasts. Our expectations
were lower as we had become less bullish
on the company after it encountered
project delivery delays in the last few quarters. Despite recording a
slightly lower revenue of RM665.3m (-7.1% q-o-q) in 1QFY12, its net
profit of RM78.3m was actually higher by 68.8% due to the recognition of higher
margin contracts, especially by the engineering and construction division.
Also, the performance of the group’s marine conversion and repair division also
improved.
Maintain Neutral.
We are also keeping our FY12 earnings forecast unchanged for now although the
1QFY12 numbers only contributed about 21% to our full-year FY12 net profit estimate.
We expect higher contributions from 2Q and 3Q this year since O&G
activities in Malaysia usually peak during these quarters in light of better weather conditions and higher
spending from Petronas and its PSC contractors
(which usually spend their allocated capex in 1Q every year). Also, our
fair value for the stock remains unchanged at RM5.40, based on the existing PER
of 23x FY12 EPS.
Source: OSK188
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