MHB drops 4% after dismal financial result

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KUALA LUMPU (Feb 6): Shares of Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) fell as much as 4% after the group reported dismal results for the fourth quarter and full financial year ended Dec 31, 2014.

The counter had earlier dipped to a low of RM1.47, down 6 sen or 4%, before paring losses to settle at RM1.49 as at 11.49 am.

Some 1.98 million shares changed hands between RM1.47 and RM1.53. At current price, it has a market capitalisation of RM2.448 billion.

The counter was traded at a high of RM3.90 on April 21,2014, and touched a low of RM1.34 on Jan 13, this year.

Year-to-date, the stock had fallen some 14%.

In a note to client today, MIDF Amanah Research downgraded the stock to "sell" from "neutral" and slashed its target price to RM1.19 from RM2.32 previously.

The house noted MHB's (fundamental: 1.4; valuation: 1.8) full financial year 2014 (FY14) earnings had declined by more than 45% year-on-year (y-o-y) to RM129.1 million.

"The full year results were below our and consensus forecasts by a variance of more than 10%. Net margin continued to slide to only 4.8% compared with 8.2% a year earlier due to stiffening competition from other foreign fabricators," the house said.

Due to the lacklustre results, MIDF cuts MHB's FY15 earnings downward by 27% to RM135.4 million.

"We are now assuming new job orders of only RM1.5 billion compared with RM2 billion previously," it added.

To recap, MHB said yesterday that its net profit slumped 84% to RM16.48 million for the fourth quarter ended Dec 31, 2014 (4QFY14), on lower profit contribution from its offshore and marine segments.

Revenue for 4QFY14 also dropped 30% from a year ago to RM508.34 million.

The weak quarterly results pulled down the group’s net profit for the full financial year, which dropped 45% to RM129.93 million; while revenue fell 6% to RM2.7 billion.