TH Heavy up 3% after associate gets Petronas contract in Java

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KUALA LUMPUR (Nov 17): TH Heavy Engineering Bhd rose as much as 1.5 sen or 3% to 48 sen following news its 30%-owned associate had bagged an Indonesia oil and gas support services contract from Petroliam Nasional Bhd (Petronas).

The contract is for work at the Bukit Dua Development in East Java, The Edge Financial Daily reported today.

TH Heavy had later reduced gains. At 11.16am, the shares were traded at 47.5 sen with some 10 million shares trasacted.

The Edge Financial Daily reported that TH Heavy's unit Berlian McDermott Sdn Bhd had secured the contract for "transportation, installation and pre-commissioning works" at the site from PC Kelapang II Ltd, which a unit of Petronas.

Berlian McDermott is 70% owned by US-based McDermott International Inc.

"Industry players said that the Petronas contract at Bukit Tua could be worth as much as RM600,000 a day (at the lower end of the scale). Assuming a five-month charter period, the contract works out to about RM90 million.

"Judging by 20% margin on earnings before interest and tax of TH Heavy’s competitors, Berlian McDermott could make about RM18 million. This, in turn, would mean that TH Heavy’s 30% equity stake in it would rake in about RM5.4 million