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(RM m) (RM Dec-17
(%)
Jan-18
Feb-18
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Target Price Target Share Price
Azim FarisAzim Ab Rahim, CFA
Source: Bloomberg, BIMB Apr-18 FY18F ------929 - - - 0.4 0.0 0.0 May-18 78 9.7 9.7 1.8 3.6 9.9 5.6 90 90 17
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Dec-18
Equity Oil & Gas Initial Coverage
Equity Oil and Gas Initial Coverage
Oil & Gas BIMB Securities Research Initial Coverage: MMHE
Proxy to Malaysia’s offshore construction We believe the worst is over for MMHE as oil companies around the globe has begun rolling out more offshore development projects – a critical measure to arrest declining production as a result of underinvestment in prior years. With initial developments for RAPID nears completion in 2019, we believe Petronas has started to shift investments into upstream projects from 2019F onwards. Petronas’ Executive VP and CEO for Upstream, Datuk Mohd Anuar Taib, noted that the NOC would allocate RM14-15bn for capex in 2019; c.17-25% higher compared to that in 2018 (Chart 1).
Chart 1: Malaysia upstream capex spending by Petronas
30.0 RM bn
25.0
20.0
15.0
10.0
5.0
0.0 2005 2006 2007 2008 2009 2010 2011 9M2011 2012 2013 2014 2015 2016 2017 2018E 2019E
Source: Company, BIMB Securities In light of this, we see improving prospects for the sector especially for MMHE which commands the largest yard capacity for offshore structure fabrication in Malaysia (Table 1). We note that amongst local O&G services companies, only MMHE and Sapura Energy have capabilities to undertake major Engineering, Procurement, Construction and Commission (EPCC) projects weighing over 8,000 MT.
Table 1: Petronas’ local licenced fabricators Company Capacity (MT p.a.) Location Remarks
MMHE 129,700 Pasir Gudang, Johor Local players that have capabilities to take on projects >8,000MT; likely to bid for Kasawari Sapura Energy 100,000 Lumut, Perak CPP; estimated to be worth at least RM2.0bn Muhibbah Engineering 25,000 Klang, Selangor Brooke Dockyard 25,000 Kuching, Sarawak Labuan Shipyard 24,000 Labuan KKB Engineering (OceanMight) 15,000 Kuching, Sarawak TH Heavy Engineering 10,000 Pulau Indah, Selangor Currently, THHE is barred to bid Petronas’ job Boustead Heavy Industries Corp 9,000 Lumut, Perak Source: Various sources, BIMB Securities In the recently-published Petronas Activity Outlook for 2019-2021, we note that there are at least 2 possible developments of central processing platform (CPP) structures weighing over 7,500 MT (Table 2). This is essentially the offshore platform that processes oil, gas and water from wellhead platforms (WHP) before it is transported to point of export.
Table 2: Petronas’ CCP requirement 2018-2020 Weight (MT p.a.) Successful bidder/ Projects Operator Remarks Topsides Jackets Total Contender
Bokor Phase 3 9,000 9,000 18,000 Petronas Carigali MMHE Awarded in 2017 and first steel cut in 2018 Pegaga 7,500 7,500 15,000 Mubadala Sapura Energy Awarded in 2018 and expect the first steel cut in 2019 Kasawari * 23,000 15,000 48,000 Petronas Carigali Sapura Energy, MMHE Not yet awarded to contractors *Weight are estimates Source: Various sources, Upstream, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
After Bokor projects, we understand that Petronas would be developing a CPP for Phase 2 of the Kasawari gas field with total weight of c.40,000 MT. The field is located in Block SK316; an area which MMHE is familiar as it was involved with the NC3 field development together with Technip in 2013 (Chart 2).
Chart 2: Location of Kasawari field in Block SK316
The Kasawari field is located within Block SK316 together with NC3 field, approximately 180km north of Bintulu. The field holds over 3 trillion standard cubic feet (TSCF) of recoverable hydrocarbon resources, making it one of the largest non-associated gas fields in Malaysia. The tender for field development worth over US$1bn was issued in late 2015, however the project was delayed due to Petronas’ tight cash flows and increasingly technical challenge as the field contains sour gas (high CO2 content) Source: DOE, BIMB Securities We believe MMHE has an advantage over Sapura Energy (the other local player capable of executing such huge structures) as the latter could face capacity constrain given its already huge orderbook of RM18.6bn. We gathered that Sapura’s fabrication yard utilisation rate could reach 80% by 2HFY20F (FYE Jan) as it was appointed as the contractor for Mubadala’s Pegaga gas field and its own SK408 gas field.
Additionally, MMHE together with partner, TechnipFMC, has been shortlisted as one of Aramco’s vendor for the fabrication of offshore structures under a Long-term agreement (Table 6). We understand that Aramco may spend up to US$3bn pa over 6-year period (2019-2025) for offshore capex development program in Saudi.
For its MBU segment, we are also positive on its prospects. MMHE is currently building a new dry dock, DD3, which adds capacity to take on more third party jobs. DD3 is expected to be ready by 2Q20. The existing docks – DD1 and DD2 – are running at healthy utilisation rate of c.75% with the former being reserved solely for jobs assigned by MISC, leaving only DD2 for third-party or external jobs. The completion of DD3 would provide structural earnings growth to MMHE’s cash-generating unit; the MBU has been its lifeline throughout the crude oil crash. If not for a major provision made in 2018F arising from dispute with an existing client, the division has been profitable.
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BIMB Securities Research Initial Coverage: MMHE
Against its peers – deeply undervalued We compared MMHE against its regional peers and are of the view that the stock is grossly undervalued. Our finding is further elaborated as below: 4 stocks in the sector are loss-making (excluding Daewoo and Keppel) which largely reflects the challenging business condition (ie. scarcity in offshore engineering and construction jobs during 2014-2018 and intense competition in new shipbuilding market amidst oversupplied OSV/vessels market). Of those, Sembcorp Marine is the only outlier which trades over 1.0x FY19F P/B. Comparing the remaining stocks (i.e. MMHE, Samsung Heavy Ind. and Hyundai Heavy Ind), MMHE trades at c.50% discount in terms of P/B multiples or only 0.4x FY19F P/B with the rest of the sector trading at FY19F P/B of 0.7x-0.8x. Interestingly, despite MMHE’s strong balance sheet with zero gearing, it only commands 0.1x FY19F ex-cash P/B. Its cash balance stood at RM675m (or RM0.42/share) against its stock price of RM0.555. At such discount, we believe its current valuation is not justified. At our TP RM0.83 (Table 3), it implies 0.5x FY19F P/B which we think is more reasonable albeit still on the conservative side considering the improving prospects. Job wins for the Kasawari CPP, in particular, and potentially Limbayong FPSO, could replenish its depleting orderbook and be a much needed re-rating catalyst for the stock.
Table 3: Peer comparisons Market Cap Orderbook PER (x) PB (x) ROE (%) EBITDA (%) EV/EBITDA (x) Net gearing (%) Companies (US$ m) (US$ m) FY18 FY19 FY18 FY19 FY18 FY19 FY17 FY18 FY19 FY18 FY19 MMHE 200 225 n.m. 32.8 0.4 0.3 n.m. 2.6 10.6 n.m. 1.8 -32.1 -32.1 Samsung Heavy Ind. 4,312 18,500 n.m. n.m. 0.7 0.7 n.m. n.m. -2.7 n.m. 20.1 20.7 18.3 Hyundai Heavy Ind. 8,177 13,476 n.m. 138.6 0.7 0.8 n.m. 0.6 3.8 61.9 15.8 1.2 -0.8 Daewoo Shipbuilding 3,284 22,830 10.9 12.7 1.0 1.0 9.3 7.5 8.0 6.5 10.7 77.4 61.8 Sembcorp Marine 2,389 6,300 n.m. 242.9 1.5 1.5 n.m. 0.6 8.1 51.6 22.4 147.4 131.7 Keppel Corp 7,910 4,400 11.0 11.0 0.9 0.9 8.4 8.0 16.4 12.0 11.9 44.3 39.4 Sector n.m. 28.0 0.9 0.8 0.4 2.9 7.4 n.m. 13.6 43.1 36.4 Source: Companies, BIMB Securities
Limited downside risk, BUY We initiate coverage on MMHE with BUY and RM0.83 TP based on SOP method (Table 4). With its fairly surmountable cashpile of RM675m (ie. RM0.42/share), improving prospects for HEU and stable outlook for MBU, we see upside catalysts outweighing downside risk at current prices. Our TP breakdown is elaborated further below:
Table 4: TP derivation breakdown Items RM m per share (RM) Remarks Heavy engineering unit (HEU) 96.4 0.06 Conservative 5x PE on average FY19-21F EPS to reflect short cycle in offshore spending Marine business unit (MBU) 555.8 0.35 Based on 10x PE on average FY19-21F EPS Enterprise value 652.1 0.41
Add: (Net debt)/cash 675.0 0.42 As at audited account FY17 Total equity value 1,327.1 0.83 No. of shares (m) 1,600.0 Equity value per share (RM) 0.83 Implies FY19F PB of 0.5x Source: BIMB Securities
HEU segment. We apply a conservative 5x PE multiple on its average FY19-21F EPS to reflect short cycle in offshore capex spending. We are upbeat on its prospects ahead of the Kasawari CPP project award as well as potential jobs from Aramco after it was
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BIMB Securities Research Initial Coverage: MMHE
shortlisted as one of the contractors for Aramco’s offshore development project. MBU segment. We conservatively assume a 10x PE multiple to its average FY19-21F EPS; we expect full year contribution from DD3 to enhance the value of MBU in the long run. Key risks Losing market share to Sapura Energy in key projects. Unfavourable Kasawari CPP contract award to Sapura Energy would be a huge loss to MMHE but we believe the latter’s yard is currently occupied by its huge RM18.6bn orderbook. Thin margin in fabrication business. The profit margin may come under pressure should crude oil price remain depressed over the medium term. Cost overruns. MMHE has on several occasions incurred cost disputes with its clients during construction and conversion works. However, the bulk of jobs expected would be from Petronas/MISC which it has had good working relations. Key catalysts Secure Kasawari CPP project and others. MMHE is currently the front-runner for the Kasawari EPCC jobs alongside Sapura Energy. Favourable outcome of the tender would enhance its prospects. Successful venture into fabrication of wind farm structures. Successful foray into this would reduce MMHE’s dependency on offshore O&G development which could be challenging in the medium term amidst uncertainty in crude oil prices. We also note that the RE industry offers huge growth potential over the longer term.
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BIMB Securities Research Initial Coverage: MMHE
Business prospects: Measures in store We expect MMHE’s earnings to stage a turnaround and sustain a 21% CAGR over FY17-21F (Table 7) driven by expansion in the MBU segment and HEU orderbook replenishment. Our view is further elaborated as below:
Expanding marine repair business with Dry Dock 3 (DD3). We expect MMHE’s MBU segment to secure more orders in marine repairs from third-party clients with completion of the DD3 in 2Q20. Despite utilisation rate at both DD1 and DD2 are healthy at c.75%, we understand that MMHE faces bottlenecks to undertake more work orders from third-party clients as it prioritises DD1 for MISC’s LNG drydocking activities. This virtually leaves only one dry dock, DD2, for third-party repairs.
Preferred vendor for MISC’s marine conversion project. We believe MMHE would be able to leverage on MISC for marine conversion projects. We note that MMHE has completed several conversion projects for MISC in the past including FPSO Kikeh, FPSO Cendor and FSO Benchamas 2 (Table 5). Management aims to undertake at least one marine conversion project every year. We believe MMHE has an advantage to secure the Limbayong Deepwater FPSO project in 2020F through partnership with MISC.
Table 5: MMHE’s Marine conversion projects Marine conversion projects Weight (MT) Clients Year Remarks Conversion of FPSO Kikeh MISC 2007 Malaysia’s first Deepwater FPSO Rejuvenation, Life Extension and Conversion of LNG to FSU Tenaga Satu MISC 2012 Conversion of FPSO Cendor MISC 2014 Conversion of FSO Benchamas 2 MISC 2018 Conversion of FSO Bergading EA Technique 2018 Source: Company, BIMB Securities Significant orderbook replenishment with Kasawari CPP. We expect MMHE to secure the Kasawari CPP project sometime in 2019F, leveraging on its sizeable capacity and capability to handle up to c.130,000 MT pa. We estimate the Kasawari CPP contract size to be worth at least RM2.0bn; this would boost the outstanding orderbook to RM2.9bn and provide earnings visibility for the next 2-3 years.
Chart 3: HEU’s revenue and outstanding orderbook
3,000 RM m Secured SK316 RM m 1,000
2,500 800 Secured Bokor CPP 2,000 600 1,500 400 1,000
200 500
0 0 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18
Revenue (LHS) Orderbook (RHS)
MMHE secured the Bokor CPP project worth RM1bn in 3Q17, just c.4 years after securing the RM1.4bn SK316 project in FY13. Current orderbook (as of 3Q18) is at RM900m while the respective utilisation rate for West Yard and East Yard are only 30% and 0%. We expect this to improve from 2019F onwards on the back of its huge tenderbook size of RM6bn, comprising both local and foreign projects. Source: Company, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
Diversifying exposure to renewable energy… MMHE also plans to enhance utilisation rate of its fabrication yard by entering the renewable energy market; in particular, the fabrication of pre-piled jackets for Taiwan’s wind power industry. This venture will be done in collaboration with a reputable partner. If successful, we believe this would be a significant boost to MMHE’s fundamentals as dependency on the O&G sector is reduced. …and Saudi Aramco’s offshore structures. Besides that, MMHE, together with partner TechnipFMC have been selected as one of the Aramco’s Long-term agreement (LTA) vendor for the fabrication of offshore structures (Table 6). The 6+6 LTA entails a 6-year tenure with an option by Aramco to extend another 6 years. We understand that Aramco may spend up to US$3bn annually over a 6-year period (2019-2025) for offshore capex development program in Saudi.
Table 6: Saudi Aramco’s LTA list Company Base country Comments
McDermott International US Dynamic Industries US Saipem Italy Larsen & Toubro / Subsea 7 India / Norway Consortium Abu Dhabi National Petroleum Construction Company (NPCC) UAE Sapura Energy Malaysia New addition China’s Offshore Oil Engineering Company (COOEC) China New addition Lamprell / Boskalis UAE / Netherland Consortium, new addition TechnipFMC / MMHE UK / Malaysia Consortium, new addition Source: Company, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
Earnings outlook: Poised for turnaround We expect MMHE’s earnings to stage a turnaround and sustain a 21% CAGR over FY17-21F (Table 7) on the back of improving prospects, particularly for HEU. Our underlying earnings assumptions are summarised in Table 8 below:
Table 7: Earnings outlook FYE Jun (RM m) FY17 FY18F FY19F FY20F FY21F Revenue 956.4 928.7 1,909.5 2,365.9 2,420.0 EBITDA 101.1 (17.1) 144.7 176.0 187.0 EBITDA margin (%) 10.6% -1.8% 7.6% 7.4% 7.7% EBIT 14.0 (102.8) 54.2 81.1 92.1 EI (15.8) - - - - PBT 11.0 (90.0) 66.4 94.3 108.4 Core PBT 26.8 (90.0) 66.4 94.3 108.4 Core PATAMI 50.0 (90.0) 66.4 94.3 108.4 Source: BIMB Securities, Company
Table 8: Key assumptions FYE Dec FY19F FY20F FY21F Comments
USDMYR 4.10 4.05 4.00 We assumed a gradual strengthening of MYR against USD
MBU division MBU number of vessels repaired 80.0 95.0 110.0 DD3 commences by 2QFY20 Average revenue/vessel (US$ m) 1.5 1.5 1.5 Average of FY16 (US$2m) and FY17 (US$1.1m) MBU EBITDA margin 15% 15% 15% Slightly lower than FY13-17 average EBITDA margin, refer Chart 4
HEU division HEU orderbook replenishment (RM m) 2,984.0 972.0 960.0 Kasawari: RM2,000m (FY19F) and Aramco: US$240m p.a. HEU project burnrate (%) 39% 56% 75% High burnrate due to purchase order from Aramco HEU EBITDA margin 5% 5% 5% Slightly lower than FY13-17 average EBITDA margin, refer Chart 5
Source: Company, BIMB Securities Our segmental outlook are further elaborated below: Rising marine repair works. We expect the company to undertake more marine repair works FY20F onwards with the completion of DD3.
Chart 4: MBU segment earnings forecast
800 RM m % 35 30 600 660 25 577 20 492 400 464 445 15 365 370 10 200 285 5 253 106 84 99 75 74 87 99 41 0 0 -5 FY13 FY14 FY15 FY16 FY17 FY18 FY19F FY20F FY21F -10 (45) (200) -15
Revenue EBITDA EBITDA margin
MBU commands higher margin than HEU projects at c.15-30% over FY13-17 In FY18, the MBU segment turns into losses due to additional cost provision incurred for conversion works of FSO Benchamas 2 and FSO Mekar Bergading as a result of ongoing dispute with its client, EA Technique Source: Company, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
Steady orderbook replenishment for HEU. We believe MMHE will be able to secure major fabrication project such as Kasawari CPP and other fabrication projects including the wind farm pre-pile jacket as well as purchase order from Aramco. Our orderbook replenishment and burn-rate assumptions are presented in Table 8.
Chart 5: HEU segment earnings forecast
3,500 RM m % 10 3,000 2,500 2,600 2,000 2,448 5 1,995 1,500 1,789 1,760 1,000 1,418 500 182 0 137 100 747 591 30 559 28 71 89 88 0 (500) (28) (1,000) (5) FY13 FY14 FY15 FY16 FY17 FY18 FY19F FY20F FY21F Revenue EBITDA EBITDA margin HEU project delivered slim EBITDA margins at c.5-7% over FY13-17, lower than MBU’s. This is due to the nature of EPC works where MMHE incurs high costs for subcontracting some of the work scope and/or procure certain structures from third party, apart from incurring costs for its own labour and raw materials (steel). In 2016, the segment turned into loss due to a one-off impairment charges due to idling fabrication yard. Current outstanding orderbook as at 3Q18 is worth only RM900m. Source: Company, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
APPENDIX Background of the company - Malaysia’s largest offshore fabricator Malaysia Marine Heavy and Engineering Bhd (MHB) is Malaysia’s largest offshore fabricator equipped with one of the largest dry-dock facility in Southeast Asia (SEA), located in Pasir Gudang, Johor. It has two business segments:
Heavy engineering unit (HEU) which fabricates offshore structures such as CPP, WHP etc. to the extent of full scope basis (ie. EPCC). Currently, it has two fabrication yards located in Pasir Gudang, Johor namely ‘MMHE West’ and ‘MMHE East’ with combined annual fabrication capacity of 129,700 metric tonne (MT). Marine business unit (MBU) which carries out conversion projects (such as FPSO, FSO) and marine repairs including dry-docking services to LNG vessels, rigs etc. It has three dry-docking facilities namely Dry Dock 1, Dry Dock 2 and Floating Dock (in Kemaman) with aggregate capacity to handle vessels of up to 600,000dwt.
MMHE has vast experience in delivering offshore construction and vessel conversion projects. Currently, it is the only yard in Malaysia that has experience in constructing deepwater structures as well as completing the marine conversion projects (such as FPSO and FSO). Key projects delivered are as Table 9:
Table 9: MMHE’s notable offshore projects Heavy engineering projects Weight (MT) Clients Year Remarks
Kikeh Truss Spar 15,908 Murphy Sabah 2006 Asia’s first deepwater Truss spar Gumusut Kakap Semi-submersible Floating production System (FPS) 39,000 Sabah Shell 2013 Asia’s largest deepwater structure Tapis Enhanced Oil Recovery (EOR) projects 20,869 ExxonMobil 2014 SEA’s first large scale EOR project SK316 projects 33,895 Petronas Carigali 2015 Malikai Tension Leg Platform (TLP) 27,500 Sabah Shell 2016 Malaysia’s first deepwater TLP project Bokor Phase 3 Redevelopment CPP 15,000 Petronas Carigali Ongoing
Marine conversion projects
Conversion of FPSO Kikeh MISC 2007 Malaysia’s first Deepwater FPSO Rejuvenation, Life Extension and Conversion of LNG to FSU Tenaga Satu MISC 2012 Conversion of FPSO Cendor MISC 2014 Conversion of FSO Benchamas 2 MISC 2018 Conversion of FSO Bergading EA Technique 2018 Source: Company, BIMB Securities
Shariah compliance We reviewed MMHE’s Shariah Status in accordance with the screening methodology and processes adopted by the Shariah Advisory Council of Securities Commissions Malaysia (SACSC):
Table 10: MMHE’s Shariah Status review as of FY17 Business Activity Benchmark MMHE SACSC Benchmark Remarks
Non-permissible Income / turnover 1.7% 5% Below the allowable limit set by SACSC Financial Ratios Benchmark MMHE SACSC Benchmark Cash in conventional account to Total Asset 19.9% 33% Below the allowable limit set by SACSC Conventional debt to Total Asset 0.0% 33% Below the allowable limit set by SACSC Source: Company, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
Historical financial highlights – MBU provides MMHE with recurring income
Chart 6: Revenue breakdown by segment Remarks
3,000 RM m Prior to the 2014 crude oil price crash, the HEU made up c.90% of total revenue. 2,500 It only secured the Bokor CPP in 3QFY17, over 4 years from the SK316 development 2,000 project, worth RM1.4bn, awarded in FY13. Revenue from HEU fell to c.60% in 2017, 1,500 in tandem with the depleting orderbook.
1,000 As at 3QFY18, outstanding orderbook was only RM900m which mainly consists of 500 works relating to the Bokor CPP. MBU revenues has been MMHE’s lifeline 0 mainly from MISC (periodic survey on LNG FY13 FY14 FY15 FY16 FY17 vessels) and steady repair works from Marine Heavy Engineering third party. Source: Company, BIMB Securities
Chart 7: EBIT breakdown by segment Remarks
250 RM m MBU provides a steady recurring income while HEU revenues decline due to scarce 200 offshore development projects. 150 This is apparent when HEU swung into net 100 loss in FY16 in tandem with declining 50 revenue; the earnings impact was partly offset by MBU. 0 FY13 FY14 FY15 FY16 FY17 (50)
(100)
(150) Marine Heavy Engineering
Source: Company, BIMB Securities
Chart 8: MMHE maintains net cash position Remarks
1,000 RM m Despite thin margins and scarce offshore development projects, MMHE remains in 800 net cash position over the past 5 years. We believe this was partly due to recurring 600 cashflows from MBU and its strong capital management. 400 MMHE finances its huge working capital requirement via short term borrowings. 200 With a strong balance sheet, we believe MMHE is capable of weathering any 0 market downturn in the future. FY13 FY14 FY15 FY16 FY17 Cash Total borrowings Source: Company, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
Income Statement FYE 31 Dec (RM m) 2017 2018F 2019F 2020F 2021F Turnover 956.4 928.7 1,909.5 2,365.9 2,420.0 Net opex (855.4) (945.8) (1,764.9) (2,189.9) (2,233.0) EBITDA 101.1 (17.1) 144.7 176.0 187.0 Depreciation & amortisation (87.0) (85.7) (90.4) (94.9) (94.9) EBIT 14.0 (102.8) 54.2 81.1 92.1 Interest income 16.0 15.8 15.2 16.2 19.3 Interest expense - - - - - Associates & JVs (3.2) (3.0) (3.0) (3.0) (3.0) Exceptional Items (15.8) - - - - Pretax profit 11.0 (90.0) 66.4 94.3 108.4 Core PBT 26.8 (90.0) 66.4 94.3 108.4 Tax expense 21.4 - - - - Minority interest 1.8 - - - - Core PATAMI 50.0 (90.0) 66.4 94.3 108.4
Balance Sheet FYE 31 Dec (RM m) 2017 2018F 2019F 2020F 2021F Non-Current Asset 1,839.4 1,925.7 2,007.2 2,084.3 1,986.4 Current Asset 1,545.3 1,546.0 2,570.1 3,070.8 3,334.5 Total Asset 3,384.7 3,471.6 4,577.4 5,155.2 5,320.9
Non-Current Liabilities - - - - - Current Liabilities 807.1 984.1 2,023.3 2,506.9 2,564.2 Total Liabilities 807.1 984.1 2,023.3 2,506.9 2,564.2 Total Equity 2,577.6 2,487.6 2,554.0 2,648.3 2,756.7 Total liabilities & equity 3,384.7 3,471.7 4,577.4 5,155.2 5,320.9
Cash Flow FYE 31 Dec (RM m) 2017 2018F 2019F 2020F 2021F Cash flow from operating activities (CFO) 70.0 74.1 196.3 200.0 189.8 Cash flow from investing activities (CFI) (46.1) (159.2) (159.8) (158.8) 19.3 Cash flow from financing activities (CFF) (20.0) - - - - Net change in cash & cash equivalent 3.9 (85.1) 36.5 41.2 209.1 Source: Company, BIMB Securities
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BIMB Securities Research Initial Coverage: MMHE
DEFINITION OF RATINGS BIMB Securities uses the following rating system:
STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months. TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain. HOLD Share price may fall within the range of +/- 10% over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15% in the next 3 months. SELL Share price may fall by more than 10% over the next 12 months. NOT RATED Stock is not within regular research coverage.
SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analyst’s coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analyst’s coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analyst’s coverage universe, is expected to underperform the relevant primary market index over the next 12 months
Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.
Disclaimer The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB Securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this date and are subject to change without notice. BIMB Securities Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.
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BIMB SECURITIES SB (290163-X) A Participating Organisation of Bursa Malaysia Securities Berhad Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2613 1600 Fax: 03-2613 1799 Azharuddin Nordin http://www.bimbsec.com.my Head of Research
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