BOUSTEAD HOLDINGS BHD [] and BOUSTEAD HEAVY INDUSTRIES CORP [] Bhd (BHIC) share prices dipped on Monday, Aug 16 despite the latter clinching two government contracts valued at more than RM1.2 billion to undertake the in-service support for two of the navy's Scorpene submarines.
BHIC's subsidiary Boustead DCNS Naval Corporation Sdn Bhd had received the letter of award for total contract sums of €193 million (RM784.22 million) and RM532 million for the period ending Nov 30, 2015.
At 3.40pm, Boustead fell eight sen to RM4.28, while BHIC was down 13 sen to RM4.69 with 1.34 million shares done.
AmResearch has maintained its Hold rating on BHIC with an with an unchanged fair value of RM4.40/share, based on a FY10F PE of 12 times at a 10% premium to the stock's three-year average of 11 times.
In a research note issued on Monday, the research house said this implied a 20% discount to its unchanged Sum-of-Parts valuation of RM5.50/share.
AmResearch said this was in line with its forecast assumption of RM265mil annually as highlighted in its earlier reports.
"As the six-year contract is expected to expire in Nov 30, 2015, we expect the recognition of 10-months of progress work starting on Dec 1, 2009 to materialise in 3QFY10," it said.
by Surin Murugiah
The Edge Malaysia
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