DEFENCE
BOUSTEAD HEAVY INDUSTRIES CORP
(BHIC MK, BHIC.KL)
8 August 2012
Continuing commercial losses in 2Q
Company report
Alex Goh alexgoh@ambankgroup.com +603 2036 2291
Price Fair Value 52-week High/Low Key Changes Fair value EPS YE to Dec Revenue (RMmil) Core net profit (RMmil) EPS (Sen) EPS growth (%) Consensus net profit (RMmil) DPS (Sen) PE (x) EV/EBITDA (x) Div yield (%) ROE (%) Net Gearing (%) Stock and Financial Data Shares Outstanding (million) Market Cap (RMmil) Book value (RM/share) P/BV (x) ROE (%) Net Gearing (%) Major Shareholders 248.5 705.7 1.72 1.6 3.0 18.3 Boustead Holdings (64.9%) Lembaga Tabung Angkatan Tentera (8.2%) 28.0 0.3 3mth (19.6) (17.8) 6mth (15.0) (12.2) 12mth (20.9) (31.0)
1,727
HOLD
(Maintained)
Rationale for report: Company Result
RM2.67 RM2.90 RM4.11/RM2.40
Investment Highlights
•
Unchanged Unchanged FY11 544.1 12.8 5.1 n/a 6.0 51.9 11.5 1.5 3.0 18.3 FY12F 453.8 13.2 5.3 3.3 31.1 6.5 50.3 25.4 1.5 3.1 67.3 FY13F 555.2 47.7 19.2 261.2 59.4 6.5 13.9 11.1 1.5 10.8 100.8 FY14F 684.5 135.1 54.4 183.2 104.5 6.5 4.9 9.7 1.5 26.2 107.5
We maintain our HOLD call on Boustead Heavy Industries Corp (BHIC) with an unchanged sum-of-parts based fair value of RM2.90/share which implies a FY13F PE of 15x – a 10% discount to Singapore Technologies Engineering Ltd’s (STE) 2-year average of 17x. BHIC’s 1HFY12 net loss of RM17mil was expected, as forewarned in our report dated 29 June this year. The losses stemmed largely from the absence of any initial contributions from Boustead Naval Shipyard’s (BNS) RM9bil littoral combat ships (LCS) contract, chartering losses and further provisions for Swire Pacific Offshore Ltd’s two accommodation crane barges, which will face a further 3-month delay in delivery to the end of this year. For now, we maintain FY12F-FY14F earnings which already incorporate the additional cost and delays in the Swire accommodation work barge deliveries till the end of the year. These delays for the...