TH Heavy Engineering Q2 net loss widens on slower fabrication business, unrealised forex loss

PETALING JAYA: Practice Note 17 TH Heavy Engineering Bhd (THHE) saw its net loss widen to RM16.8 million in the second quarter ended June 30, 2017 on lower fabrication activities and unrealised foreign exchange loss of RM1.4 million.

This came on a more than two-thirds fall in revenue to RM2.4 million for the quarter under review, compared with RM7.7 million for the same quarter in 2016. The group made a net loss of RM6.8 million in Q2 of 2016.

The group, which is trying to regularise its financial condition through a scheme of arrangement with its creditors that is yet to be revealed, is cautiously optimistic of its business prospects.

In a filing with Bursa Malaysia, the group said it expects the fabrication business to remain challenging in view of the present competitive environment and capital expenditure cut by major oil companies.

THHE, however, has ventured into shipbuilding, with plans to expand into refurbishment and maintenance works and non-oil and gas-related fabrication works, which are expected to provide more stable and recurring income.

As at June 30, 2017, the group, via THHE Destini Sdn Bhd, a joint-venture company between THHE Fabricators Sdn Bhd and Destini Shipbuilding and Engineering Sdn Bhd, has an order book for supply, delivery, testing and commissioning of three offshore patrol vessels for Malaysian Maritime Enforcement Agency of RM738.9 million.

Net loss for the six months ended June 30, 2017, however, narrowed slightly to RM38 million for the period, compared with a net loss of RM40.3 million for the same period in 2016. This was on a 79% fall in revenue to RM4.6 million for the six month period, compared with RM22.2 million for the same period in 2016.

The stock closed unchanged at 5 sen, with 535,000 shares traded. It has a market capitalisation of RM56.1 million.