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.

Maybank research (7 December 2011)

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