This article first appeared in The Edge Financial Daily, on November 17, 2015.

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd’s (BHIC) 60%-owned subsidiary Boustead DCNS Naval Corp Sdn Bhd has clinched a dual currency contract worth €169.86 million (approximately RM800 million) and RM432.4 million - or a total value of RM1.23 billion - to refit two submarines for the Malaysian government. 

In an announcement to Bursa Malaysia yesterday, BHIC said Boustead DCNS, a joint venture between BHIC Defence Technologies Sdn Bhd (60%) and DCNS SA (40%), had accepted a letter of acceptance yesterday from the government dated Nov 12 for the award of the contract.

The contracted service is for two prime minister’s class submarines of the Royal Malaysian Navy, and would begin on Nov 1.

“The contractual refit period for each submarine is 18 months from the respective start date for the relevant submarine refit,” said BHIC, a maritime and shipping service provider owned by Lembaga Tabung Angkatan Tentera.

The award will have a material effect on the group’s earnings for the financial year ending Dec 31, 2015, and will contribute positively to future earnings, it added.

BHIC (fundamental: 0.45; valuation: 0.3) shares closed four sen or 1.85% lower yesterday at RM2.12, with only some 15,800 shares traded. Its market capitalisation is RM523.73 million.

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.