It declared a final dividend of five sen per share for FY13 which translates into a dividend payout ratio of 34%, below Petroliam Nasional Bhd-related stocks’ average payout of 50%.
FY13 revenue dropped to RM2.8 billion (13% y-o-y) mainly driven by lower contribution from its offshore division as the projects in hand are nearing completion with lower value of progress claims remaining. The projects, such as FPSO Cendor, Tapis Enhanced Oil Recovery (EOR) and Kebabangan Northern Hub Development, are more than 90% completed.
Furthermore, MHB posted a lower operating profit in FY13 at RM196 million (-19% y-o-y) in line with the weaker contribution from its offshore division — profit from its newly secured TLP Malikai has yet to be recognised as it is still in its early stage while it also incurred higher cost at the Tapis EOR project.
MHB’s order book has surged to RM2.6 billion as at December 2013 (September 2013: RM1.5 billion). We do not rule out that MHB could potentially win new jobs based on the group’s tender book of RM4 billion, half of which is for overseas jobs. We expect the group to secure at least RM1.2 billion worth of jobs based on an assumption of 30% success rate.
We keep our earnings forecast for now. MHB is valued at RM3.90. The stock is a “hold” as we expect its order book to be replenished. The acceleration in Petroliam Nasional Bhd’s refinery and petrochemical integrated development complex contract awards will continue to reinvigorate sentiment in the stock. — M&A Securities
