Wednesday 21 Feb 2024
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KUALA LUMPUR (Oct 2 ): Boustead Heavy Industries Corp Bhd (BHIC) jumped as much as 8% on news that the defence ministry has confirmed the latter’s RM9 billion worth of marine patrol vessel orders from the firm, dealers said.

At 10.52am, BHIC was traded at RM2.51 with some 27,000 shares done. The exchange's sixth-largest gainer had earlier risen as much as 18 sen to RM2.55.

"It is most probably due to the news," a dealer told over telephone.

BHIC said yesterday its associate Boustead Naval Shipyard Sdn Bhd (BNS) had received an amended letter of acceptance from ministry. This is for a confirmed RM9 billion contract to build six second-generation patrol vessels known as ittoral combatant ships (LCS) for the Royal Malaysian Navy.

According to BHIC, the 10-year contract effective between December 29, 2011 and December 28, 2021, comes with a further advance payment of RM700 million.

Meanwhile, AmResearch Sdn Bhd analyst Alex Goh said the firm has maintained its "buy" call for BHIC shares. This comes with an unchanged target price RM3.80.

Goh said AmResearch has also maintained its earnings forecast for BHIC for financial years ending December 31, 2013 to 2015.

The analyst said this is "on expectations of a significant y-o-y surge in 4QFY13 earnings as BNS has yet to recognise progress billings from the LCS contract to date".

AmResearch expects BHIC to secure more contracts. Goh said BHIC's current gross and net order books come to RM10 billion and RM3 billion respectively.

Goh said  AmResearch expects further news flow of fresh contracts in BHIC pending the announcement of Malaysia's 2014 Budget and against the backdrop of the Lahad Datu incursion earlier this year.

"The upcoming fresh orders may comprise two patrol vessels potentially worth RM1bil and 25 additional fast interceptor crafts valued at RM330mil for the Malaysian Maritime Enforcement Agency.

"Additionally, the group, which has a Petronas major fabrication license, is still open to non-military-based projects given the country’s huge oil and gas development prospects," Goh said.

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