Capital markets executive summary | Fri 19 May 2023

Capital markets executive summary | Fri 19 May 2023

MHB net profit up 30%

Net profit for Malaysia Marine and Heavy Engineering Holdings Berhad (MHB) – a subsidiary of Petronas – grew from RM2.72m in 1Q ended 31 Mar 2022 to RM3.54m in 1Q ended 31 Mar 2023. Revenue increased 18.77% from RM417.78m to RM496.23m. Higher revenue from ongoing heavy engineering projects helped the segment’s revenue to rise from RM358.4m to RM404.2m. However, the segment recorded an operating loss due to unabsorbed overheads. Revenue for the company’s marine segment jumped from RM59.4m to RM92.1m supported by more drydocking and repair activities. Operating profit soared 4-fold from RM3.7m to RM12.9m. The company sees China’s reopening and Opec+ production cuts as supportive of high oil prices therefore driving capital expenditure up for oil majors. In addition, the company anticipates opportunities arising from the rapid growth of renewable energy and decarbonisation efforts. Notwithstanding, the risk of a global recession, geopolitical tensions and competition from Chinese shipyards could pose challenges. MHB closed at 54 sen.

Dialog 3Q net profit marginally lower by 1.7%

The company’s net profit fell from RM133.07m in 3Q ended 31 Mar 2022 to RM130.81m in 3Q ended 31 Mar 2023 due to higher project and operation cost. Earnings per share was lower from 2.36 sen to 2.32 sen. The company declared a 1.3 sen interim dividend payable on 27 Jun. Revenue however jumped by 35.28% from RM593.43m to RM802.79m supported by offshore project implementation activities at the Bayan field in Sarawak. Also contributing to revenue were higher sales of specialist products and services, increased engineering, construction and maintenance activities in Singapore, and fabrication activities in New Zealand. The company gained a higher share of joint ventures from RM55.17m to RM100.42m with the completed acquisition of Pan Orient Energy (Siam) Ltd – the concessionaire and operator of Concession L53/48 onshore Thailand oilfield in Aug 2022. For 9M2023, net profit shrank from RM389.76m the prior year to RM383.74m. Revenue climbed 40.66% from RM1.64b to RM2.31b. The focus of the company is its midstream business and the Pengerang deepwater terminals. The counter closed at RM2.20.

TIME dotcom 1Q net profit up 26.32%

The company’s net profit jumped from RM90.65m in 1Q ended 31 Mar 2022 to RM114.51m in 1Q ended 31 Mar 2023. Earnings per share rose from 4.97 sen to 6.23 sen. The improved results were contributed by higher share of associates’ profits, foreign exchange net gains, smaller donation, and lower write offs of property, plant and equipment. The biggest contributor though was an increased in revenue by 6.31% from RM346.54m to RM368.42m due to higher contributions from data – up from RM282.59m to RM315.96m – and data centre – up from RM72.46m to RM87.04m – segments. Offsetting profits are larger staff costs, depreciation and amortisation expenses, and finance costs. The 54.4 sen special interim tax exempt dividend from the sale of AIMS data centre declared on 28 Apr will be paid next Fri. The counter closed at RM5.30.

RAM Ratings assigns AA3 rating for MTT Shipping’s RM1.5b sukuk programme

The company provides container liner shipping services to manufacturers, traders and freight forwarders, and feeder services to mainline operators. It has a growing charter hire operation. MTT Shipping has a 40.5% share of the local market with a fleet of 17 container vessels or total capacity of 19,124 20-foot equivalent units (TEU). It focuses on Peninsular-East Malaysia routes which are more stable and has less volatile freight rates and volumes compared to international trade routes. Its rapid fleet and trade route expansion plus stronger freight and charter rates allowed the company to post double-digit revenue growth the last 3 years. Operating profit before depreciation interest and tax (OPBDIT) more than doubled from RM251.87m in FY2021 to RM652.79m in FY2022. MTT Shipping’s gearing eased from 1.02 times in 2021 to 0.53 times in 2022 as its net profit raised equity levels. Debt to OPDBIT ratio was 0.89 times in 2022. With the issuance of the sukuk, debt will peak at RM940m thereby raising gearing to 0.6-0.8 times while debt to OPBDIT will jump to under 2 times. The company may face challenges in chartering out its 11 new vessels as new capacity dampens freight rates. RAM expects OPBDIT to ease to RM450m-RM500m while funds from operations debt cover ratio will stay robust above 0.5 times.

Ekuinas looking to sell Orkim

The state-owned private equity fund was established in 2009 to increase the economic participation of Bumiputras. It acquired 95.5% of Orkim – a shipping company – in 2014. Ekuinas values Orkim at RM1.5b and has already engaged an adviser for the sale. Industry players and financial sponsors have shown interest. Orkim started as a shipbroker in 2004 and became a shipowner 5 year after that pursuant to the delivery of its 1st vessel. It currently owns 18 vessels 153,637 deadweight tonnes with 10-year average age. It claims to be the only Malaysian company to secure long-term contracts from Petronas and Shell for clean petroleum products domestic sea transportation.