Nothing To See Here

SHAH ALAM: Nothing to see here. Boustead Heavy Industries Corporation (BHIC) reported a rather lackluster performance for the first six months of the year though it will depend on what report you read.

The Edge reported that:

Boustead Heavy Industries Corp Bhd (BHIC), which slipped into the red in the second quarter ended June 30, 2020 (2QFY20) from a year ago, is looking to grow its business in the aerospace, marine and land sectors to enlarge its market base beyond government-related projects.

KD Keris arriving at the Sepanggar naval base jetty for the welcoming ceremony

The NST was slightly positive though:

Boustead Heavy Industries Corp Bhd (BHIC) posted a net profit of RM19.82 million in the first half (H1) ended June 30 2020 from from a net loss of RM1.36 million a year ago. Group revenue, however, eased 11.4 per cent to RM79.95 million from RM90.23 million previously.

The numbers above were announced in the BHIC announcement to Bursa Malaysia of its financial report for the first six months of 2020. It is a 17 pages long document but despite the recent announcement on the LCS, BHIC only included one line on the project.

Our Associate, Boustead Naval Shipyard Sdn Bhd (“BNS”) continues engaging with the relevant stakeholders to finalise the current issues on LCS programme

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Perhaps it want to keep it under the radar as it work behind the scenes to resolve the problem. However as it is an existential programme for the company it certainly deserves further than one paragraph explaination.

From the prospects part of the announcement:

Being part of the Boustead Group, BHIC’s initiatives support Boustead Holdings Berhad’s Transformation Plan dubbed EDGE20 that was launched on 16 July 2020. This is a three-year journey to transform Boustead Group into a high performing and sustainable conglomerate. EDGE20 contains 20 initiatives covering Funding, Structural, Operational and Corporate Governance.

In line with the key objectives of the plan to strengthen the Group’s prospects and unlock value, we have put in place plans to enhance efficiency and productivity to steer ourselves back on the path of profitability.The Group remain cautious about its prospects in the current financial year amidst the adverse effects of the Covid-19 pandemic on the nation’s and the global economy.

It is expected that the impending economic slowdown to affect the Defence budget but the Group is confident that the Malaysian Government will not waver from its commitment to protect the nation’s defence sector. The movement restrictions imposed in China and Malaysia to curb the Covid-19 pandemic had caused some delay to the Littoral Mission Ship (“LMS”) programme.

Although work has partially resumed, the milestones of the project will have to be reviewed given the delay caused by the lockdown.

Our Associate, Boustead Naval Shipyard Sdn Bhd (“BNS”) continues engaging with the relevant stakeholders to finalise the current issues on LCS programme.

The contracts awarded to the Group’s joint ventures for the In-Service Support for the RMN’s Prime Minister’s Class Submarines and extension for the Integrated Maintenance and Logistic Support Services on three units of MMEA Dauphin AS365N3 helicopters, are expected to positively contribute to the Group’s bottomline.

With regard to the winding-up petition served by MTU Services (Malaysia) Sdn Bhd on our Associate, BNS, we are assessing the operational and financial impacts of the petition on BNS and we have engaged legal counsel to advise us on the matter.

LCS PCU. Maharaja Lela. Her name could be seen on the stern. Picture taken on Aug. 25. 2017. Used for illustration only

As for the last paragraph, this is probably the reason the government had decided to take the possession of the LCS – the hulls, steel and other equipment stored at BNS facility in Lumut – just in case the MTU managed to get the winding up petition against BNS. It was the lessons learnt from the training ship fiasco.

— Malaysian Defence

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