Stock Name: MHB
Company Name: MALAYSIA MARINE AND HEAVY ENG
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Company Name: MALAYSIA MARINE AND HEAVY ENG
| Research House: ECMLIBRA | Price Call: SELL | Target Price: 4.21 |
Maintain SELL, TP: RM4.21
9MFY11net profit of RM206m (-36% y-o-y, -42% q-o-q) was disappointing making up only51% of house and 42% of consensus full year estimates. The variance from ourresults were due to (i) delays in projects delivery (ie. Gumusut-Kakapload-out), (ii) lower than expected recognition from new projects, and (iii)higher-than-expected effective tax rates. At current price, MMHE is trading ata hefty PE of 22x, a 51% premium over average comparable peers in the region.Considering MMHE's smaller net income and smaller market capitalizationagainst closest peers Sembcorp Marine and Keppel Corp, as well as slower growthin the next 2 years, we feel that its PER valuation is unjustifiably rich.Reduce target price from RM4.96 to RM4.21. Maintain our SELL.
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