BHIC narrows losses by 84% in 4Q

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KUALA LUMPUR (Feb 26): Boustead Heavy Industries Corporation Bhd (BHIC) saw it net loss narrow by 84% to RM4.48 million in the fourth quarter ending Dec 31, 2014 (4QFY14) compared to RM28.06 million in the previous corresponding period, which it attributed to steady progress of the Littoral Combat Ship (LCS) project.

Revenue for 4QFY14 increased 7.5% to RM120.01 million compared to RM111.65 million in 4QFY13, BHIC's filing with Bursa Malaysia today showed.

Full year (FY14) earnings jumped 464.7% to RM17.85 million compared to RM3.16 million in FY13, while revenue increased 4.3% to RM332.82 million compared to RM319.05 million in FY13.

BHIC (fundamental: 0.2; valuation: 0.6) noted that the leap in its full year earnings was due to steady progress of the LCS project, no impairment to the group's chemical tankers, lower finance cost and profit contribution from associates.

Revenue in FY14 also improved due to higher contribution from the company's heavy engineering segment, as the Belum Satelite Topsides Facilities for Murphy's Sarawak Gas Development project saw progress.

BHIC's unit Boustead Penang Shipyard Sdn Bhd had, in March last year, secured a RM108 million contract from Murphy Sarawak Oil Co Ltd for the fabrication of offshore topsides for Block SK309 Belum Satellite-A Platform, in phase two of the Sarawak Gas Development Project.

However, Boustead noted that despite higher charter rates and favourable exchange rates, the chartering segment continued to record losses due to higher operating expenses and periodic dry docking expenses incurred on its chemical tankers.

Boustead said it would expand cautiously into the oil and gas business which are sustainable, noting that the Belum Satelite project is expected to be delivered in the first half of this year.

It also noted that all its Chulan tankers are now under a bareboat charter agreement, reducing managing and operating costs under the chartering segment.

"The heavy engineering segment will continue to drive the BHIC Group's performance though defence related maintenance, repair and overhaul activities," the statement read.

At 2.23pm, BHIC was trading at RM2.15, having declined 3.59% or 8 sen, giving it a market capitalisation of RM534.18 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)