KUALA LUMPUR: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) saw its net profit rise 4.03% in the first quarter ended March of financial year 2015 (1QFY15) to RM36.03 million from RM34.63 million a year ago on higher marine operating profit, mainly due to higher value for vessels repaired. Earnings per share rose to 2.3 sen against 2.2 sen in 1QFY14.

MHB’s (fundamental: 1.4; valuation: 2.0) 1QFY15 revenue grew 7.15% year-on-year (y-o-y) to RM719.5 million from RM671.46 million previously, according to the offshore and marine services provider’s quarterly report to Bursa Malaysia yesterday.

Both the marine and offshore segments contributed to the higher revenue.

The better offshore top line was due to the completion of the SK316 wellhead platform (WHP) project during the quarter. However, operating profit was lower from this segment due to higher additional costs to complete some existing projects.

“Currently, the group is fabricating the Malikai EPC (engineering procurement and construction) tension leg platform (TLP), the SK316 CPP (central processing platform), and WHP, the Besar-A WHP and jacket, the North Malay Basin project’s Bergading WHP, jackets and connecting bridge and the external turret mooring system for the Petronas (Petroliam Nasional Bhd) floating liquefied natural gas 2 project,” said MHB in a press statement.

“We are already seeing improvements in efficiency and cost management in our project execution. Moving forward, the increased emphasis would be on business development and marketing,” MHB managing director and chief executive officer Abu Fitri Abdul Jalil said in the statement.

“The business we are in remains challenging with tough operating conditions. Nevertheless, we are cautiously optimistic in building up our order book in the medium term [within the next nine to 12 months]. Our immediate priorities are to focus on smaller EPCIC (engineering, procurement, construction, installation and commissioning) jobs to keep the yards running and our people busy,” he said.

For the quarter, MHB secured a hook-up and commissioning contract for the Kanowit project valued at RM30.4 million under its offshore business segment. It has also bagged an en bloc repair and refurbishment contract from South Korea’s Pan Ocean under its marine business.

“The group is taking up new challenges in bidding for international offshore and onshore fabrication projects. We are reasonably optimistic that we are able to compete effectively for jobs in the overseas market. We are currently pursuing some RM7 billion worth of projects both internationally and locally,” Abu Fitri said.

Abu Fitri, who was previously the group vice-president for offshore business, took the helm at MHB in March this year, succeeding Dominique Soras, whose contract of employment ended on Feb 28.

MHB shares closed down 2.36% at RM1.24 yesterday, giving it a market capitalisation of RM2 billion.

This article first appeared in The Edge Financial Daily, on April 28, 2015.