Boustead Holdings (Buy) - Progress In The RM9bn PV Contract

Stock Name: BSTEAD
Company Name: BOUSTEAD HOLDINGS BHD

Research House: HLG

Price Call: BUY

Target Price: 6.20

Boustead Holdings (Buy)

Progress In The RM9bn PV Contract

• Boustead Naval Shipyard (BNS) awarded BHIC to undertake engineering,integration and procurement works for combat management system (CMS) at a totalceiling contract sum of RM1.532bn over 10 years from 9 April 2012.
• The CMS is for the 6 units of patrol vessels (PV) awarded by Ministry ofDefense (MoD) to BNS back in Dec 11.
• This is part of the overall RM9bn PV contract it is expected to enhancethe earnings of both BNS and BHIC.
• Positive given the progress with the PV contract which will keep itsheavy industry division busy over the next 9 years and help boost BHIC (as wellas BNS) future earnings.
• Reiterate that the PV contract will act as a catalyst to support shareprice and performance over the longer term.
• Forecasts unchanged albeit factoring RM7bn for the PVcontract, implying potential upside to our forecasts.
• Maintain Buy.
• Target pricemaintained at RM6.20 based on 10% holding company discount to estimated SOP ofRM6.89.

Source: HLIB Research - 10 April 2012