Malaysia’s BHIC Still a Buy on Hopes of Shipbuilding Orders

ECM Libra Avenue Investment Bank said it is keeping its 'buy' call on Boustead Heavy Industries Corp Bhd (BHIC) because it expects the Malaysian shipbuilder to get more contracts, especially for naval vessels. Boustead Holdings Bhd owns 65 percent of BHIC and the Malaysian armed forces pension fund, Lembaga Tabung Angkatan Tentera, is the major shareholder in Boustead Holdings. BHIC will deliver its third patrol vessel to the Royal Malaysian Navy, a fourth is scheduled for delivery early in December and two more will be delivered by 2009, ECM said in a note. The company will be busy for the next 10 years, reportedly with another 21 patrol vessels in the pipeline. BHIC's management has indicated that the value of its order book will reach $298.5m by 2008, which means more contracts are likely be secured in the near future. The brokerage forecasts that BHIC will make net profit of $39.7m in 2008 and $53.1m in 2009. ECM is keeping its target price of $2.69 per share for BHIC stock to reflect the company's strong third-quarter results and promising outlook. Last month, the company said it swung to profit in the third quarter on an exceptional gain of $117.3m. It booked net profit of $130.1m, against a loss of $14.3m a year earlier. [Source: Thomson Financial]