Boustead Heavy Industries BUY
Price target RM9.00
Share price at 27 Feb RM6.05
Investment summary
BHIC returned to profitability in FY07, and exceeded our forecast by 60%, albeit from a low base. Revenue and margin expansion indicate that BHIC is back in business, and re-affirm our BUY rating on the stock. We remain bullish on BHIC because: (1) BHIC is negotiating for the next batch of 4-6 Offshore Patrol Vessels (OPV), valued at RM1.2bn-RM1.4bn/vessel (2) management expect to secure the Petronas’s offshore structure fabrication license which enables BHIC to bid for new platform projects valued at >RM8bn in the next five years. BHIC was awarded a RM90m steel structure job from CPOC in Feb08, their first O&G job since 2002.
Set for the next level
FY07 results were positive, but order book expansion remains BHIC’s key share price driver: BHIC has won RM500m jobs in the last 12 months, and we think they are likely to win RM1bn in FY08.
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Tuesday, 4 March 2008
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