KLCI Stock - MHB / 5186 - 2012 Quarter 2

MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD


Company Description

MALAYSIA MARINE AND HEAVY ENGINEERING HOLDINGS BERHAD, formerly MSE Holdings Berhad, is a Malaysia-based company engaged in the provision of heavy engineering and marine services, which focuses on the oil and gas sector. The Company operates in two segments: engineering and construction, and marine conversion and marine repair. Its engineering and construction business offers a full range of oil and gas construction and engineering services, from detailed engineering design and procurement to construction, installation, hook-up and commissioning. The Company's marine conversion business includes converting vessels, such as very large crude carriers (VLCCs), Aframax tanker and offshore oil rigs into floating structures for the offshore and gas industry. The marine repair business offers repair, refit and refurbishment services to a range of vessels, with focuses on energy-related vessels, such as chemical tankers, offshore oil rigs, gas carriers and other offshore support vessels.

Company Info

Listing Date	2010-10-29
IPO Price	3.8
Market Capital (Capital Size)	7,696,000,000 (Very Large)
Par Value	RM 0.50
Board	Main
Sector	Trading/Services
Major Industry	Oil & Gas Engineering
Sub Industry	Marine conversion & repair
Website	http://www.mmhe.com.my/

My Analysis

Forecast P/E now	(4.81-0.1)/0.1921 = 24.52 (Moderate)
Target Price	5.19+0.1 = 5.29 (PE 27.0, EPS 0.1921, DPS 0.1)
Decision	BUY if stock price keep the strong buy volume above 4.75 or see if can strong rebound around 4.6
Comment	Revenue increased 45.2% and also higher than preceding year corresponding quarter 0.8%, eps decreased 29.2% and also lower than preceding year corresponding quarter 30%, no cash generated from operating due to receivables increased hence spent 39.2% to cover all other expenses, operating margin is very low, weaker liquidity ratio but still indicate financial strength is at acceptable level, very high gearing ratio now but is very well leverage through payables, significant higher receivables most probably to reflect higher revenue in near future
First Support Price	4.75
Second Support Price	4.6
Risk Rating	MODERATE

Research House

Maybank Target Price	5.7 (2012-07-05)
BIMB Target Price	4.9 (2012-08-03)
CIMB Target Price	4.75 (2012-08-03)
ECM Target Price	4.44 (2012-08-03)
HwangDBS Target Price	4.9 (2012-08-03)
Kenanga Target Price	4.22 (2012-08-03)
MIDF Target Price	5.06 (2012-08-03)
OSK Target Price	5.32 (2012-08-03)
RHB Target Price	3.4 (2012-08-03)
TA Target Price	5.86 (2012-08-03)
AMMB Target Price	4.6 (2012-09-18)

Accounting Ratio

Return on Equity	16.23%
Dividend Yield	2.08%
Gross Profit Margin	-
Operating Profit Margin	5.55%
Net Profit Margin	6.27%
Tax Rate	8.21%
Asset Turnover	0.5917
Net Asset Value Per Share	1.6
Net Tangible Asset per share	1.56
Price/Net Tangible Asset Per Share	3.45
Cash Per Share	0.79
Liquidity Current Ratio	1.2215
Liquidity Quick Ratio	1.2176
Liquidity Cash Ratio	0.3212
Gearing Debt to Equity Ratio	1.5562
Gearing Debt to Asset Ratio	0.6085
Working capital per thousand Ringgit sale	22.6%
Days to sell the inventory	2
Days to collect the receivables	334
Days to pay the payables	400

Technical Analysis

SMA 10	4.729 (Uptrend)
SMA 20	4.751 (Uptrend 2 days)
SMA 50	5.045 (Downtrend)
SMA 100	5.039 (Downtrend)
SMA 200	5.195 (Downtrend)
MACD (26d/12d)	-0.057482 ( 0.00879 )
Signal (9)	-0.087648 ( 0.007542 )
MACD Histogram	0.030166 (Bullish trend 13 days)
Bolinger Upper Band	5.053
Bolinger Lower Band	4.449

My notes based on 2012 quarter 2 report (number in '000):-
- Revenue and operating profit for the quarter from Offshore segment were mainly contributed by existing projects in hand and a newly secured Kebabangan project. In the corresponding quarter, higher revenue and operating profit was mainly attributed to the already completed EPCIC Turkmenistan Block 1, Phase 1 project

- Revenue and operating profit of Marine has improved resulting from the progress achieved for FSU Lekas, and higher LNG vessel repair works secured during the quarter as compared to the corresponding quarter. The FSU Lekas has been completed and delivered to client during the quarter

- Estimate next 4Q eps after 2012 Q2 result announced = 2561456*0.12/1600000 = 0.1921, estimate PE on current price 4.81 = 24.52(DPS 0.1)
- Estimate next 4Q eps after 2012 Q1 result announced = 2505503*0.12/1600000 = 0.1879, estimate highest/lowest PE = 29.54/24.32 (DPS 0.1)
- Estimate next 4Q eps after 2011 Q7 result announced = 2424212*0.12/1600000 = 0.1818, estimate highest/lowest PE = 30.14/25.57 (DPS 0.05)
- Estimate next 4Q eps after 2011 Q6 result announced = 0.05*4*1.05 = 0.21, estimate highest/lowest PE = 27.95/24.71 (DPS 0.05)
- Estimate next 4Q eps after 2011 Q5 result announced = (0.08+0.05)*2 = 0.26, estimate highest/lowest PE = 26.15/19.04 (DPS 0.05)
- Estimate next 4Q eps after 2011 Q4 result announced = (0.08+0.06)*2 = 0.28, estimate highest/lowest PE = 31.32/22.39 (DPS 0.05)

- Yearly revenue, 2008 = 1741922, 2009 = 4021147, 2010 = 6147012
- Yearly PAT, 2008 = 194645, 2009 = 282221, 2010 = 284115

MHB latest news (English)

MHB latest news (Chinese)

Financial Quarter Summary

a_date	year	qrt	h_price	l_price	div	roe	c_roe	rev	c_rev	pbt	c_pbt	prof	c_prof	eps	c_eps	asset	liab	mino	equi	cfo	cfi	cff	cash	fcf	net	final	share	c_share	m_cap	date	gros_m	oper_m	prof_m	vat	asset_t	pe	navps	ntaps	p/ntaps	cps	l_cur	l_qui	l_cash	g_de	g_da	avg_w	inv_d	rec_d	pay_d
2012-08-02	2012	2	N/A	N/A	-	2.40%	5.80%	965712	1630979	60503	147255	55321	133588	0.0346	0.0835	6541916	3980460	3647	2561456	348122	469462	N/A	2085585	817584	817584	1268001	1600000	1600000	8608000	2012-06-30	-	5.55%	6.27%	8.21%	0.5917	-	1.6	1.56	3.45	0.79	1.2215	1.2176	0.3212	1.5562	0.6085	22.6%	2	334	400
2012-05-09	2012	1	5.65	4.67	-	3.40%	3.40%	665267	665267	86752	86752	78267	78267	0.0489	0.0489	4676149	2170646	3434	2505503	263023	23824	N/A	2085585	286847	286847	1798738	1600000	1600000	7808000	2012-03-31	-	12.89%	13.04%	10.00%	0.84	-	1.56	1.56	3.13	1.12	1.5979	1.5856	0.8393	0.8675	0.4642	32.6%	3	149	212
2012-02-21	2011	7	5.53	4.88	0.1	3.82%	16.95%	716148	2137034	54081	250848	46355	205601	0.0290	0.1285	4462466	2038254	3628	2424212	741837	21374	83000	1448122	720463	637463	2085585	1600000	1600000	8816000	2011-12-31	-	7.39%	7.55%	14.17%	0.6858	-	1.51	1.51	3.65	1.3	1.6132	1.6005	1.0368	0.8421	0.4568	40.3%	3	135	254
2011-11-17	2011	6	5.97	5.29	-	6.61%	13.13%	463088	1420886	100366	196767	80225	159246	0.0501	0.0995	4486591	2105407	3567	2381184	868633	7027	N/A	1448122	861606	861606	2309728	1600000	1600000	9600000	2011-09-30	-	18.34%	21.67%	20.07%	0.8159	-	1.49	1.49	4.03	1.44	1.5819	1.5712	1.1092	0.8855	0.4693	33.1%	2	96	221
2011-08-16	2011	5	6.85	5.0	-	6.51%	6.51%	957798	957798	96401	96401	79021	79021	0.0494	0.0494	4707205	2326249	3570	2380956	575468	9563	N/A	1448122	565905	565905	2014027	1600000	1600000	10624000	2011-06-30	-	6.91%	10.06%	17.75%	0.8966	-	1.49	1.49	4.46	1.26	1.528	1.5163	0.868	0.9785	0.4942	29.0%	3	130	212
2011-05-06	2011	4	8.82	6.32	0.05	10.60%	37.15%	923294	4435420	114080	424026	128641	450748	0.0804	0.3113	4927254	2625562	3302	2301692	49337	114803	846363	765899	164140	682223	1448122	1600000	1447800	10928000	2011-03-31	-	9.80%	12.36%	-	0.9002	21.9379	1.59	1.59	4.3	0.91	1.4422	1.4305	0.5518	1.1423	0.5329	26.2%	3	190	229
2011-02-22	2011	3	7.15	6.31	-	11.06%	26.55%	1316353	3512126	113329	309946	134148	322107	0.0884	0.2304	5329729	3149935	3430	2179794	742759	69431	353628	765899	673328	1026956	1792855	1517400	1398000	9711360	2010-12-31	-	8.54%	8.61%	-	0.9585	-	1.56	1.56	4.1	1.18	1.3647	1.3544	0.5747	1.4473	0.591	22.3%	3	174	242
2010-11-22	2011	2	6.65	4.41	-	6.41%	15.49%	1022875	2195773	101545	196617	77712	187959	0.0580	0.1400	4267766	3177532	3896	1090234	714157	60088	301500	765899	654069	352569	1118468	1339862	1342564	6029379	2010-09-30	-	9.88%	9.93%	23.16%	1.2304	-	0.81	0.81	5.56	0.83	1.0162	1.0064	0.3553	2.925	0.7445	1.0%	2	142	236
N/A	2011	1	N/A	N/A	-	9.09%	9.09%	1172898	1172898	95072	95072	110247	110247	0.0820	0.0820	N/A	N/A	-	N/A	924820	42881	300750	765899	881939	581189	1347088	1344476	1344476	N/A	2010-06-30	-	8.16%	8.11%	-	N/A	-	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	-	N/A	N/A
N/A	2010	4	N/A	N/A	-	N/A	N/A	1596239	6147012	177451	377206	115150	279203	0.0860	0.2090	4784127	3570963	14785	1213164	1243304	260042	452044	234681	983262	531218	765899	1338953	1335900	N/A	2010-03-31	-	11.19%	11.12%	33.83%	0.9338	-	0.9	0.9	N/A	0.57	1.1683	1.1564	0.2364	2.9798	0.7464	12.2%	3	243	277
N/A	2010	3	N/A	N/A	-	N/A	N/A	1459117	4550773	107386	199755	97990	164053	0.0730	0.1230	N/A	N/A	-	N/A	1240372	233275	252100	234681	1007097	754997	989678	1342329	1333764	N/A	2009-12-31	-	7.49%	7.36%	6.76%	N/A	-	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	-	N/A	N/A
N/A	2010	2	N/A	N/A	-	N/A	N/A	1411901	3091656	45331	92369	30521	66063	0.2613	0.9890	N/A	N/A	-	N/A	820143	159902	211400	234681	660241	448841	683522	116800	66800	N/A	2009-09-30	-	3.23%	3.21%	32.11%	N/A	-	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	-	N/A	N/A

Financial Quarter Balance Sheet

year	qrt	Deferred tax assets (A-0)	Goodwill on consolidation (A-0)	Investment in jointly controlled entity (A-0)	Other investments (A-0)	Prepaid lease payments (A-0)	Property, plant and equipment (A-0)	Cash and cash equivalents (A-1)	Current tax assets (A-1)	Derivative assets (A-1)	Inventories (A-1)	Trade receivables (A-1)	Deferred income (L-0)	Deferred tax liabilities (L-0)	Loans & borrowings (L-0)	Derivative liabilities (L-1)	Loans & borrowings (L-1)	Provision for taxation (L-1)	Provisions (L-1)	Trade and other payables (L-1)	Minority interest (M-1)
2012	2	-	62783	69878	15	238141	1349545	1268001	789	305	15212	3537247	-	33195	-	-	-	28137	55321	3863807	3647
2012	1	57	-	62780	15	65054	1123745	1798738	787	152	26382	1598439	-	27529	-	-	-	25406	61625	2056086	3434
2011	7	57	-	61037	15	65569	1090619	2085585	2724	-	25593	1131267	-	26675	-	2328	-	21122	61625	1926504	3628
2011	6	-	-	80624	15	66083	1045950	2309728	-	-	22298	961893	96	23066	-	-	-	19870	64546	1997829	3567
2011	5	155	-	65199	15	66598	1029892	2014027	2453	-	27293	1501573	650	5385	-	-	-	24387	61625	2234202	3570
2011	4	9686	-	35019	15	67114	1030256	1448122	2453	-	30632	2303957	991	-	-	-	-	28302	61327	2534942	3302
2011	3	-	-	10435	15	67628	994342	1792855	1891	-	32337	2430226	1237	29192	-	-	650	9814	49494	3059548	3430
2011	2	-	-	12057	15	68143	989022	1118468	1891	-	30881	2047289	1713	28172	-	-	1400	14921	49689	3081637	3896
2010	4	253	-	179	15	69173	928851	765899	1893	-	38523	2979341	2326	25693	302631	-	2900	48816	50399	3138198	14785

Financial Quarter Income Statement

year	qrt	Revenue	Income tax expense	Finance/interest costs	Other income	Administrative/Operating expenses	Minority interest	Share of net profit of jointly controlled entity
2012	2	965712	4969	876	34922	946992	213	7737
2012	1	665267	8679	738	22211	601731	194	1743
2011	7	716148	7665	-	36281	699495	61	1147
2011	6	463088	20144	-	19859	398006	3	15425
2011	5	957798	17112	-	7357	898934	268	30180
2011	4	923294	14433	4	19485	852275	128	23580
2011	3	1316353	20353	11	11328	1215322	466	981
2011	2	1022875	23521	21	724	922589	312	556
2011	1	1172898	15185	733	25215	1102436	10	128
2010	4	1596239	60029	1155	12064	1429696	2272	1
2010	3	1459117	7264	1887	2924	1352768	2132	-
2010	2	1411901	14555	216	2295	1368649	255	-

Financial Quarter Segments Revenue

year	qrt	Others	Elimination/Adjustment	Engineering & Construction	Marine conversion & repair
2012	1	20	3228	516637	151838
2011	7	83	10097	594073	132089
2011	6	376	14485	379549	97648
2011	5	611	27387	866689	117885
2011	4	324	12763	884883	50850
2011	3	591	265	1269194	46303
2011	2	981	48696	2002811	240677

Financial Quarter Segments Profit

year	qrt	Others	Elimination/Adjustment	Engineering & Construction	Marine conversion & repair
2012	1	9705	-	65786	10256
2011	7	26712	23024	33188	16058
2011	6	5894	608	71999	6440
2011	5	8259	390	51818	5754
2011	4	5487	918	98246	14147
2011	3	7076	1905	104864	2324
2011	2	1057117	1033756	112979	60347

Short form reference
a_date = announcement date, yr = financial year end, qrt = quarter
h_price = stock highest price during the quarter, l_price = stock lowest price during the quarter
div = dividend recommend or declare in the quarter, roe = return on equity
c_roe = cumulative of return on equity during the financial year
rev = revenue in the current quarter, c_rev = cumulative of revenue during the financial year
pbt = profit before tax in the current quarter, c_pbt = cumulative of profit before tax during the financial year
eps = earnings per share in the current quarter, c_eps = cumulative of earnings per share during the financial year
asset = total asset, liab = total liability, mino = minority interest, equi = total equity
cfo = net cash flow from operating activities, cfi = net cash flow from investing activities
cff = net cash flow from financing activities, cash = cash and cash equivalents as at beginning of financial year
final = cash and cash equivalents as at current financial period ended
share = diluted/basic weighted average number of ordinary shares
c_share = cumulative of diluted/basic weighted average number of ordinary shares during the financial year
m_cap = market capital at announcement date of quarterly report, date = current financial period ended date
prof_m = profit margin, vat = income tax rate, pe = price earning per share ratio of recent four quarter
navps = net asset value per share, ntaps = net tangible asset per share, cps = cash per share
l_cur = liquidity current ratio, l_qui = liquidity quick ratio, l_cash = liquidity cash ratio
g_de = gearing debt to equity ratio, g_da = gearing debt to assets ratio
avg_w = working capital per thousand Ringgit sale
inv_d = days to sell the inventory, rec_d = days to collect the receivables
pay_d = days to pay the payables

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