KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) is expected to grow its order book significantly in 2021, according to Maybank Investment Bank (IB) Research.
The research unit said that this year, MMHE is expected to grow its order book, currently totalled at RM1.9bil, turning some of its tenders pipeline worth RM12bil into order wins of more than RM1bil.
Maybank IB Research said offshore final investment decision activities have picked up, following the sustained strength of oil prices.
“That is positive for offshore fabricators like MMHE, being an indication of capital expenditure (capex) resumption in the oil and gas market.
“We expect MMHE to bag some decent-sized jobs this financial year, starting with the domestic projects, followed by overseas prospects, ” it said.
Based on Petronas Activity Outlook 2021 to 2023, seven offshore fabrication tenders are on offer this year.
The research unit’s channel checks indicate that the award of the Jerun central processing platform or CPP, a 13,000-tonne project, will be out soon.
“Given the size of the job, it is a contest between MMHE and Sapura Energy Bhd. Securing the Jerun job, estimated to be worth over RM1bil, will be a major catalyst, ” it said.
While the value and job scope are smaller versus its previous job win – the CPP Kasawari that was secured in 2019 – the excitement and impact that it could potentially bring would be similar.
Also, MMHE might be able to land the Limbayong floating production storage and offloading job in the second half of 2021.
Maybank IB Research said MMHE has proven to be financially resilient amidst the oil crisis and Covid-19 pandemic last year and currently sits on RM403mil cash.
The research unit maintained its “buy” call on MMHE and raised its target price to 85 sen from 65 sen previously, on higher 0.8 times enterprise value/order backlog (mean valuation) expectation of RM1.2bil versus 0.7 times and RM800mil orders previously.