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.
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.
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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View Comments (115)
So your last paragraph answered some of my question previously. but that sounds very serious (winding up petition) and want to know more about the reason for that.
Reply
Again without access to the winding up petition it will be impossible for me to say anything about it
If BNS does windup, how will it affect the sub refit contract just recently awarded to them? And if BNS does end up getting liquidated, do we have other options where to refit our subs (other than DCNS)?
Reply
I think the winding up petition only covers the BNS in Lumut, not its subsidiaries or associate companies. That said I am not purview to the petition itself
lets say the government decides to stop all funding for the gowind project.
a) Would the RM6 Billion already paid to BNS able to complete at least 4 ships?
b) should we go and get a cheaper alternative frigate design as soon as next year (start of RMK12) to fulfill the tasks of the gowind frigates?
Reply
Personally if I have some US$5 billion laying around, I will buy 18 98 meter Sigma corvettes from Damen for RMN. It will be equipped with a 76mm gun, a 12 box launchers for CAMM, 12 Exocet launchers and two triple torpedo launchers.
@ marhalim
Our naval development expenditure is usd2 billion for one RMK...
I am thinking, rather than pushing forward with the gowinds and getting more of that (which is really a shame, because it is a good design and does not reflect the bad situation the project is in right now), probably get a similar frigate but cheaper and probably less complicated?
The Hyundai HDF-2600 design is quite nice and with a cost of about usd165 million each we could get 6 for around usd1 billion. These is nearly as large as the gowind frigates, adequately armed and costs nearly half of the smaller less equipped kedah class opvs. Koreans are good at keeping to timelines, and also open to building them in customers country.
What we could do is to have the 1st batch of say 6 to be build in korea. Then a 2nd batch in RMK13 to be build in Malaysia, but at say 3 different shipyards (2 each at labuan, miri, pasir gudang) to encourage healthy competition.
To enable the first batch to afford a towed array sonar (captas-2), equipments such as the TRS-3D radar and FCS to be cannibalised from the kedah class ships.
So by 2030 TLDM would have
2x Lekiu F2000
4x Maharajalela Gowind
12x HHI HDF-2600 Mod MY
2x kasturi retired and sold to free up manpower and operational budget.
6x kedah downgraded to pure OPV passed on to MMEA to free up manpower and operational budget.
Can be done still within the existing level of TLDM development budget of usd2 billion per RMK.
Reply
If its a frigate size it should be done where the design is done. Patrol boats and OPVs could be done in country.
@Marhalim.
I see. But if BNS does gets foreclosed, would that affect BDNC access to their Lumut shipyard in order to refit the subs & LCS? That would be a disaster as these kinda legal fight could last in court for years.
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None of the sub work is done in Lumut, the amount of money being claimed by MTU is just RM56 million plenty of things they can take from BNS without waiting for years, if they can get the petition. The case regarding the Samudera class took around two years so that's a fair timeline to look at
@...
A) If not mistaken gov said can only complete 2 ships for rm9 billion right?
B) yes if the cheaper alternative is a Kedah class variant with NSM and mica/camm/essm. Other than that we probably have to source out new designs which meant new tot etc which we all know increase the total cost.
@ luqman
a) The target is at least 2. Which is where my question comes in, can it be actually stretched to 4 ships without needing any additional funds?
b) The kedah class as it is, is much more expensive (usd300 mil vs usd165 mil), smaller (1850 ton vs 2900 ton), and less armed than the HHI HDF-2600. To fully arm the kedah class, you will be looking at gowind prices, which is why we buy the gowinds in the 1st place.
The worse case scenario IMO for tldm surface ship fleet would be
By 2030 TLDM would have
2x Lekiu F2000 frigate
2x Kasturi corvettes
0x Maharajalela Gowind frigates
12x HHI HDF-2600 Mod MY frigates
And a lost/write-off of rm6 billion ringgit from the gowind adventure.
Reply
If we buy the South Korean frigates as you envisaged. In reality it will be 2 Lekiu, 2 Kasturis and 4 LCS
@ marhalim
" My take 2 Lekiu, 2 Kasturis and 2 LCS "
There would be a high possibility that to even get 2 LCS, we need to pump additional rm3 billion into the bottomless money pit, with the option 1 and 2 of continuing the LCS project, for a total of rm9 billion for just 2 ships.
I am all in if we can finish at least 4 LCS without needing to pump in additional 3 billion ringgit (so the cost capped to just the rm6 billion already paid for). But if we need to pump in additional 3 billion ringgit, just to get 2 LCS, it would be better if we spend 4.2 billion ringgit and we can confirm to get 6 frigates on time right?
Reply
I am all for more ships for RMN but its unlikely the government will even consider scrapping a RM6 billion project and spend another RM4.2 billion for six totally different ships.
@Marhalim
I see. Thanks for info. It doesn't sound as bad when you put that way. However TLDM should plan ahead for servicing contingencies in case BNS & BDNC are unable to perform the scheduled servicing.
As for building frigate-sized vessels, I still stand that we can do it. Our industry have built far larger carrier vessels for MISC so we have the technical capabilities to perform the job. Our only failing were project planning & oversight, proper budgeting, and free from meddling during builds. A professional shipbuilder managing the project here can resolve most of the issues above. If these issues are not eliminated from a project with firm leadership & direction, even building simple skiffs would face the same hiccups as LCS did.