MMHE downgraded to HOLD at Maybank with TP of RM5.70

4 reasons stated for downgrade:
- delay in projects roll-out
- a likely setback at Sime Darby’s yard (it is mentioned that will only contribute from FY14E)
- grey visibility at Turkmenistan
- higher tax rates

Earnings from 2011E to 2013E cut by 9-29%.

Tactical downgrade to Hold. The delay in projects roll-out, a likely
setback at Sime Darby’s yard, grey visibility at Turkmenistan and higher
tax rates are the 4 key reasons that compel us to cut 2011-13 earnings
forecasts by 9-29%. The slower execution will constrain available yard
space and could see MMHE missing out some projects in 2012. Against
this backdrop, we cut our TP to RM5.70 (20x 2013 PER; -29%). We
also downgrade our call on the stock due to fair valuations at this
juncture although we remain positive over its longer term prospects.




Lowering 2011-13 forecasts by 9-29%. We now expect negligible
contribution from the Sime Darby yard in 2012-13 vs. earlier projected
RM30-150m in net profit contribution p.a. In addition, we now project
zero associate profit contribution in 2012-13 at its Turkmenistan venture
(previously RM29m p.a.) on a more challenging orderbook
replenishment outlook. Our new forecasts also assume a higher tax
rate for the group on unabsorbed allowances on lower yard utilisatio