KUALA LUMPUR, Sept 30 (Bernama) -- Malaysia Marine and Heavy Engineering Holdings Bhd (MHHE) will need to secure at least another RM1 billion to RM2 billion worth of new jobs, in addition to the sizeable contract just secured from Petronas, to be completely out of the woods, said Alliance Research.
Last Friday, Petronas awarded the engineering, procurement, construction, installation and commissioning (EPCIC) contract for the development of two gas fields in Block SK316 offshore Sarawak, to a joint venture (JV) between France's Technip and MMHE.
"While no contract values were disclosed, we believe MMHE's portion is potentially worth up to RM1.5 billion," it said in a research note, adding the contract was a much-needed reprieve for the company.
The contract would boost MMHE's orderbook to an estimated RM3.3 billion and more contracts would be required to provide earnings growth in 2014 financial year (FY14) and FY15.
"We make no changes to earnings at this juncture as the contract has been priced in, and continue to be neutral on MMHE given its unattractive valuation.
"We prefer SapuraKencana Petroleum Bhd for exposure to the oil and gas sector, given the group's solid earnings visibility which is backed by a RM26 billion orderbook," it added.
Meanwhile, RHB Research, which assumed the contract to worth RM3.2 billion (US$1 billion), believed the contract would lift the company's order backlog to RMM3.4 billion.
"Although positive, we think that the contract has been priced in, as MMHE's shares had gained 20 per cent since June and we had assumed RM2.5 billion to RM3 billion in annual orders. We maintain neutral rating.
"For large-caps O&G exposure, we prefer SapuraKencana given the group's better growth profile and valuations," RHB Research said.
-- BERNAMA
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