What ails TH Heavy Engineering?

By Zaidi Isham Ismail
editor@dagangnews.com

 

Buried deep among the more than 1,000 companies listed on Bursa Malaysia is a firm called TH Heavy Engineering Berhad (THHE).

As the acronym implies, TH or Tabung Haji is the owner of this heavy engineering and oil and gas outfit.

The firm was listed on Bursa Malaysia in 2005 as one of TH's business divisions to complement travel, property and plantations to generate a recurring income for the haj pilgrim management fund.

The firm was conceptualised at a time when crude oil prices was king and THHE was supposed to ride on the oil boom by supporting the sector's fabrication needs.

THHE fabricates oil rigs and other supporting structures used in the oil and gas industry.

But fast forward to the present day, THHE has lost its luster and continue to be among the laggards.

The company has been loss making and is now a Practice Note 17 (PN17) company, a Bursa Malaysia category slapped on financially distressed companies.

THHE has been given a time extension to submit its turnaround plan by October this year.

Failure to do so will result in the company beings delisted from Bursa Malaysia.

But steps have already been taken by the government to turnaround government linked firms such as THHE.

A Tabung Haji official said THHE has also been transferred to Urusharta Jamaah Sdn Bhd, a special purpose vehicle set up by the Finance Ministry to turnaround beleaguered TH subsidiaries which include THHE.

"THHE has always been labelled as a defensive stock meaning its shares are illiquid due to the unwillingness of its parent Tabung Haji to let go some more shares into the market.

Because of that THHE is not on the radar screen of most investors especially among the foreign funds," a Permodalan Nasional Berhad fund manager told DagangNews.com.

He added THHE has always been mundane unable to match its peers such as Sime Darby Engineering and Ramunia fabrication yard now owned by Serba Dinamik Holdings Berhad.

The situation at THHE was further compounded last year when COVID-19 struck in March further depressing global oil prices to as low as US$10 per barrel dragging the financial perfromance of most oil and gas firms, THHE included.

"Tabung Haji's intention to diversify its income by setting up THHE was good but I'm afraid there was no follow up by its parent company. There is hardly any news on THHE's latest project," said the PNB fund manager.

But still TH managed to secure a few projects here and there becoming part of the Malaysia Petroleum Resources Corporation which is the consortium project leader in Pengerang, Johor.

But the way forward looks bright as global crude oil prices begins to climb to over US$70 per barrel and oil and gas activities are picking up worldwide.

Will THHE rebound and capitalise on the burgeoning crude oil prices?

No one knows really and investors will just have to wait until October when THHE presents its turnaround plan. - DagangNews.com

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