MMHE jumps 9% on its return to profitability in 4Q19


SHARES of Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) rose the most in more than two years yesterday, as the company returned to the black after being in the red for seven consecutive quarters.

The counter gained 6.5 sen or 9.09% to close at 78 sen, giving the marine and heavy engineering solutions provider a RM1.25 billion market capitalisation.

It saw 874,900 shares traded during the day, which was 65% above the 20-day average.

MMHE, a subsidiary of MISC Bhd, posted a net profit of RM9.28 million in the fourth quarter ended Dec 31, 2019 (4Q19), against a net loss of RM25.22 million recorded a year ago, contributed by operating profit in the marine segment.

In an exchange filing yesterday, the group said its marine segment recorded RM5.22 million in operating profit during the three months, compared to an operating loss of RM32.97 million in 4Q18.

The group’s earnings per share for 4Q19 was higher at 0.6 sen against a loss per share of 1.6 sen for October to December 2018.

Quarterly revenue slightly increased to RM275.64 million in 4Q19 from RM273.24 million in the same quarter last year.

The firm’s marine segment posted RM127.1 million in revenue for the quarter in focus versus RM49.19 million in 4Q18, mainly contributed by the increase in revenue from conversion work and liquefied petroleum gas vessels.

Heavy engineering revenue in 4Q19, however, fell 33.7% to RM148.54 million from RM224.05 million in the previous corresponding quarter, mainly due to most ongoing projects being at their tail end, while newly secured projects were still at the infancy stage.

For the full year ended Dec 31, 2019 (FY19), the group’s net loss narrowed to RM34.22 million from a RM122.69 million net loss in the previous year.

Revenue for the 12 months increased 4.12% to RM1.01 billion from RM974.35 million in FY18.

MMHE said it remains prudent on the outlook for the heavy engineering business in the near term, amid uncertainties surrounding the timing of capital spending by major oil and gas players.

“The group is cautiously optimistic on the outlook for the marine business in view of the expected global liquefied natural gas expansion, driven by an increase in exports from Qatar, Australia, Russia and the US to the Asia-Pacific market.

“In view of the implementation of the International Maritime Organisation requirements on Jan 1, 2020, the group expects no further deferment of dry docking activities by ship owners in 2020,” it said in a statement yesterday.

However, uncertainties linger amid continuing sluggish global economic growth, geopolitical instability, oil demand disruptions, growth in US shale oil production and the intensifying coronavirus outbreak.

It observed modest signs of oil price recovery throughout the year, particularly towards the end of the 4Q as trade tensions de-escalated following a positive “Phase 1” deal between the US and China, and further production cuts by OPEC.

The company also remains committed to replenishing its orderbook by expanding its footprint in various geographical areas and diversifying into new business opportunities.

It said efforts to ensure competitiveness of ongoing and future bids remain a key priority, in tandem with continuing focus on cost optimisation and improved execution and delivery of ongoing projects.