BHIC - Lifted by higher tax credit

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP

Research House: HWANGDBS

Price Call: BUY

Target Price: 4.00

Boustead Heavy Industries; Buy; RM3.68
Price Target: RM4.00; BHIC MK

4Q11 result beat expectations; declared 1st interim dividend of 6 sen per share. RM9bn OPV contract to provide long-term earnings visibility. Maintain Buy rating and RM4.00 TP.

Source: HwangDBS Research 24 Feb 2012

Earnings to turn around from Gen2 naval job

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP

Research House: AMMB

Price Call: BUY

Target Price: 4.90

Poised on earnings inflection point

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP

Research House: AMMB

Price Call: BUY

Target Price: 4.90

Dawn of a golden era for BHIC

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP

Research House: HWANGDBS

Price Call: BUY

Target Price: 4.00

Boustead Heavy Industries Corp Bhd
(Dec 19, RM3.16)
Maintain buy at RM3.15 with target price of RM4: BHIC announced last Friday that its 21%-owned associate, Boustead Naval Shipyard (BN Shipyard), has received a letter of award from the Ministry of Defence to design, construct and deliver six units of second generation patrol vessels littoral combat ships (frigate class) with a ceiling price of RM9 billion. The delivery of the first vessel is estimated in 2017 with the other vessels to be delivered every six months thereafter. Each vessel weighs 2,400 tonnes and can transport one EC275 helicopter made by Eurocopter, a subsidiary of EADS.

We had expected the contract to come by end-2011. The major surprise was the higher than expected contract value of RM9 billion as opposed to our initial forecast of RM7 billion. We believe the earnings impact on BHIC will not be confined to its associate company level given its leading role in weaponry, combat systems, vessel design, naval electronics and so on, which could be undertaken on a sub-contract basis from BN Shipyard. With the massive contract, it has expunged concerns over BHIC earnings visibility.

We maintain our earnings forecast and target price for now pending details on the contract's implementation schedule and higher than expected ceiling. BHIC is a clear bargain, trading at only 9.5 times FY12 earnings per share despite its enviable monopolistic position in naval vessel construction and maintenance for the Royal Malaysian Navy. We expect BHIC to be re-rated following this news, which has been long overdue. ' HwangDBS Vickers Research, Dec 19


This article appeared in The Edge Financial Daily, December 20, 2011.

HDBSVR has Buy on Boustead Holdings, TP RM6.80

Stock Name: BSTEAD
Company Name: BOUSTEAD HOLDINGS BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 6.80

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP

Research House: HWANGDBS

Price Call: BUY

Target Price: 4.00

KUALA LUMPUR (Dec 19): Hwang DBS Vickers Research has a Buy call on Boustead Holdings with a target price of RM6.80.

It said on Monday that BOUSTEAD HOLDINGS BHD []'s 69% owned Boustead Naval Shipyard Sdn. Bhd had secured a major win after securing a Ministry of Defence (Mindef) contract to supply six patrol vessels with a contract ceiling of RM9 billion.

Boustead Holdings Bhd said its subsidiary Boustead Naval Shipyard had received the letter on Friday to design, construct and deliver six second generation patrol vessels.

The contract carries a ceiling of RM9.0 billion, to be implemented over three Malaysia Plans, 10, 11 and 12. The delivery of the first of class ship is estimated in 2017 with follow-on ships every six months thereafter.

HDBSVR said this was a major win for Boustead as well as for its listed subsidiary BOUSTEAD HEAVY INDUSTRIES CORP [] HIC (BUY, TP RM4).

'We may look to raise our FY12-FY13F EPS pending clarification with management as we had only expected a contract sum of RM7 billion,' it said.

Next generation patrol vessels to pick up BHIC's dismal FY11

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP

Research House: AMMB

Price Call: BUY

Target Price: 4.30

Boustead Heavy Industries Corp Bhd
(Nov 16, RM2.80)
Maintain buy at RM2.84 with revised fair value of RM4.30 (from RM5.20): We maintain our 'buy' call on Boustead Heavy Industries Corp (BHIC) with a lower fair value of RM4.30 per share (against an earlier RM5.20), based on a 20% discount to our revised sum-of-parts value of RM5.39 per share. Our fair value implies an FY12F price-earnings ratio (PER) of 13 times, a 35% discount to its four-year average of 20 times.

We have cut FY11F earnings by 85% due to further provision of RM50 million for cost overruns and late delivery charges in the delivery of two accommodation crane barges to Swire Pacific Offshore Operations and two 7,000 deadweight tonne oil carriers to Sealink International. BHIC's 9MFY11 net profit of RM9 million (-85% year-on-year) came in below expectations, accounting for only 14% of our FY11F earnings of RM67 million and 50% of street estimate's RM18 million.

We have cut FY12F/FY13F earnings by 14% and 48% respectively on potentially slower recognition of the next generation of six patrol vessels (with a potential value of over RM8 billion). This is likely to be awarded soon, possibly during the Langkawi International Maritime and Aerospace exhibition on Dec 6 to 10. The sixth and final patrol vessel (KD Selangor) of the first generation batch was delivered on Dec 28, 2010 and BHIC received a letter of intent for the second generation in October last year. The delay in the letter of award stemmed from prolonged technical evaluations with overseas parts and equipment suppliers.

Assuming 30% of the second generation patrol vessels are subcontracted to the group's wholly-owned Boustead Penang Shipyard, this could raise the estimated net order book from RM1.2 billion to RM4 billion, five times FY11F revenue. Other contracts could be: (i) new maintenance contracts for the first two patrol vessels; (ii) two new patrol vessels worth RM1 billion for the Malaysian Maritime Enforcement Agency; and (iii) commercial charters for three novated Gagasan chemical carriers, one secured last week with a Japanese charterer.

Despite a 24% increase in revenue to RM150 million, BHIC suffered a RM2 million loss in 3QFY11 largely due to RM30 million in additional cost overruns and late delivery charges from Swire Pacific Offshore Ltd's two accommodation crane barges, which are expected to be completed in March and June 2012, and Sealink's two oil carriers (one delivered last month and another this month).

The stock currently trades at an FY12F PER of eight times, 57% below its four-year average, a bargain for the sole military yard in the country with massive order book prospects. ' AmResearch, Nov 16


This article appeared in The Edge Financial Daily, November 17, 2011.

BHIC - BHIC continues ascend

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP
Research House: HWANGDBS

KUALA LUMPUR: BOUSTEAD HEAVY INDUSTRIES CORP []oration Bhd (BHIC) extended its gains in early trade on Friday, March 25.

At 9.30am, BHIC was up 11 sen to RM4.05 with 12,000 shares traded.

HwangDBS Vickers Research on March 24 initiated coverage on the stock with a Buy rating and target price RM6.55.

The research house said BHIC was a a bargain for its strong earnings visibility.

It said BHIC had a monopoly in naval vessel contracts, and enjoyed strong government patronage, especially from the Royal Malaysian Navy.

It also said that as one of seven Petronas-licensed fabricators, BHIC was poised to benefit from the booming O&G industry.

'With Petronas emphasizing more on the local front, and strong news flow on marginal oil field and brownfield services, and deepwater development, fabricators will be the first beneficiary of the cycle,' it said.

BHIC - BHIC no longer a diamond in the rough

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP
Research House: HWANGDBS

Boustead Heavy Industries Corp Bhd
(March 24, RM3.94)
Initiating coverage at RM3.80 with buy rating and target price of RM6.55: BHIC specialises in the construction of naval vessels, defence services, and oil and gas fabrication. It completed a major restructuring in 2007 and is now on a strong footing to bag major contracts, given its track record in delivering government and private sector jobs. We expect a significant re-rating from its bargain basement valuation of seven times FY12 earnings per share and 1.5 times price-to-book value, on the back of two-year EPS compound annual growth rate of 39%. Its balance sheet is also healthy with 0.24 times net gearing.

BHIC enjoys strong government patronage, especially from the Royal Malaysian Navy (RMN). Its current RM1.7 billion order book could more than double upon conversion of the letter of intent for the next next offshore patrol vessels (OPV), assuming 30% of the work is subcontracted to BHIC. This will provide strong earnings visibility for the next seven years. The company entrenched its execution record after delivering the first batch of six OPVs in December 2010. We also expect more contract wins from its current RM1 billion tender book. BHIC can also leverage on its global defence partners ' DCNS, Rheinmetall and MTU Friedrichshafen ' via joint ventures to penetrate other military segments. It is possible in the medium term for BHIC to increase its stake in BN Shipyard given the role of BHIC as the listed heavy engineering proxy of Boustead Holdings and the complementary roles played by both BN Shipyard and BP Shipyard operationally. Our new order win assumptions are conservative at RM600 million per year for FY11/13F while the six OPV contract assumption is tagged at RM7 billion.

As one of seven Petronas licensed fabricators, BHIC is poised to benefit from the booming oil and gas industry. With Petronas emphasising the local front, and strong news flow on marginal oil field and brownfield services and deepwater development, fabricators will be the first beneficiary of the cycle. ' Hwang-DBS Vickers Research, March 24


This article appeared in The Edge Financial Daily, March 25, 2011.

BHIC - HwangDBS places 'buy' call on BHIC

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP
Research House: HWANGDBS

HWANGDBS Vickers Research has placed a "Buy" call and a target price of RM6.55 per share on Boustead Heavy Industries Corporation (BHIC) which specialises in construction of naval vessels, defence services, and oil and gas fabrication.

"BHIC completed a major restructuring in 2007 and is now on strong footing to bag major contracts given its track record in delivering government and private sector jobs," HwangDBS said in a research note Thursday.

Initiating its coverage of the company today, it said BHIC enjoyed strong government patronage, especially from the Royal Malaysian Navy.

"Its current RM1.7 billion order book could more than double upon conversion of the Letter of Intent for the next six offshore patrol vessels, assuming 30 per cent of the work is subcontracted to BHIC."

As one of seven Petronas licensed fabricators, BHIC is also poised to benefit from the booming oil and gas industry, it added. - BERNAMA

BHIC - Boustead Heavy a bargain: HwangDBS

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP
Research House: HWANGDBS

Boustead Heavy Industries Corp, a Malaysian shipbuilder, rose to a six-week high in Kuala Lumpur trading after HwangDBS Vickers Research Sdn Bhd said the stock is a “bargain” with strong earnings growth prospects.

The stock climbed 8.2 per cent to RM4.10 at 10:03 a.m. in Kuala Lumpur trading, set for its highest close since Feb. 9.

The company was rated new “buy” with a share estimate of RM6.55, HwangDBS said in a report today. -- Bloomberg