MHB- more contracts to come?

The current issue of the Edge newsletter carried an interesting interview with Datuk Shamsul Azhar Abbas, who came across as a tough no-nonsense man. A short snippet is also carried by Reuters (here). The interview concluded with his take on the Consolidation of the domestic O&G industry as well as the need for restructuring Petronas's Vendor Development Programme ('VDP'). To wit:

We've started, by merging ourselves with Sime Darby. I think Sime Draby's (fabrication) yard is an excellent buy; we've been looking at the yard for some time now, since my days at MISC.

They are our neighbour in Pasir Gudang. We're running short of space, so it makes sense. We are running short of manpower, they have manpower. Now we have manpower, we have yard space, we have competence.

It is basically geared to expand further as the RM60 billion investment in Pengerang is going to take place just down the road.....

When I read that, I can imagine how much business is going to flow to Malaysian Marine & Heavy Engineering Holdings Bhd ('MHB'), the subsidiary of MISC that is involved in Engineering & Construction; Marine Repair; and Marine Conversion. MHB is a newly listed company, which has been rising steadily since its quotation on Bursa on October 29, 2010.

From the chart below, we can see that the stock may consolidate its recent gain as reflected in the weakness seen in its indicators. The correction would pick up pace if it break below the 20-day SMA line support at RM8.34. Its next support would be the psychological RM8.00 level & then the uptrend line support at RM7.70-7.80. I think at these level, MHB could be a good stock for medium-term investment.


Chart: MHB's daily chart as at July 11, 2011 (Source: Quickcharts)