This article first appeared in The Edge Financial Daily, on November 4, 2015.

KUALA LUMPUR: Oil and gas (O&G) services provider Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) saw its net profit for the third quarter ended Sept 30, of financial year 2015 (3QFY15) fall 56.6% to RM16.97 million or 1.1 sen per share, mainly because its offshore segment fell into an operating loss after registering lower revenue.

MHB posted a net profit of RM39.09 million or 2.4 sen per share last year, its filing with Bursa Malaysia yesterday showed.

Its offshore segment registered an operating loss of RM24.29 million, compared with a profit of RM16.09 million in the same period last year.

Meanwhile, its latest quarterly revenue came in 19.2% lower at RM436.25 million, from RM539.79 million in 3QFY14, mainly driven by its marine business segment, which saw higher on-year revenue — and operating profit — due to higher value for vessels repaired.

MHB (fundamental: 1.25; valuation: 1.1) is a 66.5%-owned subsidiary of MISC Bhd (fundamental: 1.2; valuation: 0.8), which is in turn 62.67%-owned by national oil company, Petroliam Nasional Bhd (Petronas).

For the cumulative nine months (9MFY15), MHB’s net profit fell 37.4% to RM71.02 million, from RM113.45 million a year ago, again because its offshore business sank into the red on additional costs needed to complete the tension leg platform Malikai project.

“Compensation and claims are currently being actively pursued,” said MHB.  

Revenue for the cumulative period declined 20.7% to RM1.74 billion from RM2.19 billion in 9MFY14, due to the weaker offshore segment, which registered lower revenue as most projects were completed while new ones are still at early stages.

MHB said the downturn in upstream O&G industry is expected to be protracted and will impact its offshore business unit.

It also noted that the marine segment is anticipated to remain strong and (will) cushion the downturn’s impact, though to a limited extent.