KUALA LUMPUR (March 10): AffinHwang Capital Research has maintained its “Sell” rating on Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) at RM127 with a lower target price of RM1 (from RM1.15) and said the extension of the Kasawari bid submission deadline by Petronas and the shelving of the Sepat project suggest continued weakness in the domestic fabrication market.

In a note today, the research house said active bidding on overseas projects and domestic subcontracts may help orderbook replenishment but suppress margins.

“Cutting 2015-17E EPS by 15-18%; maintain Sell.

The research house said that with the deferment of the Sepat project, the Kasawari job was the only remaining major domestic fabrication contract to be awarded, and MMHE had, on paper, a 33% chance to secure it.

“MMHE also is tendering for several small offshore fabrication projects (jackets, wellhead platforms), is awaiting tenders for subcontract work for the RAPID project and is exploring subcontract work (from Hyundai Heavy Engeering) for the Bardegg-2 substructure.

“Overall, the domestic fabrication prospects have further weakened,” it said.