LCS - RESPONSE TO THE PATRIOT STATEMENT

US Navy Asks Shipbuilders: Can You Build Us a Warship for Just $100 Million?

Introducing a $100 million (really small) aircraft carrier

As a matter of fact, this is exactly what the Navy is considering doing as part of its Light Amphibious Warship project, first referenced earlier this year. 

As reported by USNI News last month, the Navy and Marine Corps are working with "about six industry teams" to design and build a 200-foot to 400-foot long amphibious warship, displacing anywhere from 1,000 to 8,000 tons. (For comparison, Ford class aircraft carriers are more than 1,100 feet long and displace 100,000 tons, while smaller America-class "mini aircraft carriers" are more than 800 feet long and displace 45,000 tons.)

The Light Amphibious Warship, or LAW, is therefore being envisioned as a much smaller ship -- but this is commensurate to its task. As part of its new "distributed maritime operations" strategy, the Navy wants LAW to carry small units of Marines to capture small islands, launch attacks on enemy naval forces from those islands, and then quickly scoot off to different islands to launch still more attacks before the enemy can respond.

The USN budgeting to build small aircraft carriers called LAW  at USD 100 million each. 

Compare this to our LCS which works out to about RM 2 billion each should it eventually get built. RM 2 billion is USD 500 million each LCS. That would have been 30 LAW vessels for the RMN. We would have been a deep and blue water navy!

In comparison the 4 LMS built in China works out to USD 250 million each which is still expensive but the contract went through BHIC. I think the actual build cost would have been very much less but there again what else is new.

The idea of building naval vessels locally is to save cost and for technology transfer. We are achieving neither.

When BHIC reported lack of talent as one of the reason the failure of LCS build by them, we are wondering if can't the talents be seconded from other galaxies around us?

Talents can be sourced....but will political leadership allows it instead of siphoning money from the projects...we need servant leaders; not self-serving leaders...

And when the Patriot BG Raji trying to put the blames to the user (RMN) for changing the equipment and specification , the previous chief is not happy with the statement. Here some of the respond to the Patriot statement:

1. Usually shipbuilding starts by formulating complete documentation approved by the customer (TLDM) especially the Contract Building Specifications (CBS), Ship Work Breakdown Structure (SWBS), Inspection, Test & Trials Procedures & Protocols in addition to some other documents such as some categories design drawings . All this is customized by the ship equipment outfit designed e.g machineries, weapons and sensors and many more. If all the documentation is ready and ready to go, or has gone half-way, then there is a change in equipment outfit then many complications arise revamping the affected documents and redesign and reworks. Usually, when all the documentation is completed the construction work becomes smooth, in short in the order of Equipment manufacture by OEM, Eqpt FAT / PDI, Eqpt delivery, Eqpt setting-to-work (STW), Eqpt Installation, Eqpt Installation Test, Eqpt HAT, Eqpt Integration, Eqpt / System Integration Test (SIT), Eqpt SAT and Eqpt Final Acceptance Test & Eqpt Commissioning. In analyzing the LCS construction delay, Patriot, as an outsider not privy to these chain of shipbuilding procedures need to be careful in making sweeping statement with regards to the Project and resulting in free-for-all unfounded public comments. Only the RMN Project Team and it's counterpart BNS Project Management Team know the true problems,

2. I was called upon to respond to President Patriot's press release. I do not agree with the statement "Request for change of Weapon system and equipment by TLDM halfway into design and construction was the main contributory factor for the project delay." If true, it did not happen during my time as a PTL. I never asked for a weapon system change after the project started. But I once disputed the selection of Exocet and VL Mica as SSM (Surface to Surface Missile) and SAM (Surface to Air Missile) systems by the Ministry of Finance at the beginning of the system selection phase for this project again. Both systems chosen by the Ministry of Finance are not only considered inferior and outdated, but more expensive than those proposed by the RMN. TLDM has chosen NSM for SSM, and ESSM for SAM. The election by the Ministry of Finance has clearly turned its back on the election and the TLDM proposal. Missile Exocet has been converted to NSM missile but VL Mica is still maintained. For your information, NSM is the SSM system chosen by the US Navy for their new ship project, while the current VL Mica System is considered obsolete! For your information, all documents regarding this matter are stored in duplicate in a special file and archived. I have met 4 times with the PM at that time to raise the TLDM's disagreement in the selection of the two systems since the beginning of the project, not halfway into design and construction

From the PVTLDM brainstorming

Menteri Pertahanan Mohamad Sabu melawat booth pameran syarikat Boustead Heavy Industries 

BHB records net loss of RM469m in 2018, revenue at RM10.19b

By NST Business - February 28, 2019 @ 6:59pm

KUALA LUMPUR: Boustead Holdings Bhd registered a net loss of RM469.2 million in the year ended December 31, 2018 against a net profit of RM436.2 million recorded a year ago.

In a filing to Bursa Malaysia today, the company said this was due to losses incurred in its heavy industries division.

It said the results from the other divisions, with the exception of the finance and investment division, were also weaker than financial year 2017.

Boustead said the bottom line for financial year 2017 was also bolstered by the profit on disposal of plantation land of RM554.9 million.

Its revenue in the same period decreased marginally to RM10.19 billion from RM10.24 billion.

The group expects 2019 to be another challenging year, on both global and domestic fronts.

Bosutead said nevertheless, the group’s diversified nature in six core areas of the Malaysian economy augured well for it.

It said the plantation division's prospects for the coming year will be challenging.

“However, the recognition of the gain on disposal of land in Seberang Perai Utara, upon completion, should boost earnings of the division,” it said.

Boustead said fresh fruit bunch (FFB) production for 2019 was projected to see some improvement from the slow production in 2018, supported by expected increase in crops from existing operations and the Pertama Estates.

The proposed acquisition of more than 4,000 hectares of mature fields and a palm oil mill in Sandakan, Sabah, upon completion in second quarter Q2 of 2019 will also contribute to the division's performance.

However, it expects production in Sarawak to remain weak given the operational difficulties there.

Boustead said during Q4 of 2018, crude palm oil (CPO) was traded at between RM1,710 and RM2,150 per tonne.

The CPO price is expected to climb towards RM2,400 per tone by early part of Q2 2019, in line with expected stocks drawdown.

“The biodiesel mandates of Indonesia, reduction of duty on crude and refined palm oil in India coupled with China’s positive outlook from the trade dispute with the US are some of the factors supporting CPO,” it said

Boustead to sell Royale Chulan Bukit Bintang hotel for RM197m

By Bernama - March 15, 2019 @ 8:36pm

KUALA LUMPUR: Boustead Holdings Bhd (BHB) is disposing of the Royale Chulan Bukit Bintang Hotel in Kuala Lumpur to Singapore-listed Hotel Royal Ltd for RM197 million in cash.

In a filing with Bursa Malaysia today, BHB said the group was expected to realise an estimated gain of RM92 million on completion of the proposed disposal, translating into about 4.5 sen per share.

BHB's indirect subsidiary, Boustead Hotels & Resorts Sdn Bhd, today inked an agreement to sell the 418-room four-star hotel to Hotel Royal's subsidiary Every Room A Home Sdn Bhd.

A spokesperson from BHB said in a statement today that the disposal of this property formed part of the Boustead group’s overall plan to return to profitability by way of divesting non-strategic assets.

The Royale Chulan Bukit Bintang, located along Jalan Bukit Bintang, is facing increased competition within the Golden Triangle of Kuala Lumpur as well as online platforms such as Airbnb. This resulted in its relatively low occupancy rate of 52 per cent in 2018 versus the average occupancy rate of hotels within the Klang Valley of about 74 per cent, BHB said.

The company said that a refurbishment exercise would also be needed for the ageing property to remain attractive and competitive.

Weighing the prospects of maintaining the hotel, the sale offers greater value to the group.

The prime location of Royale Chulan Bukit Bintang Hotel enabled the group to dispose of the hotel at a premium over the net book value, BHB said.

The proposed disposal is, however, conditional on, among others, the buyer obtaining the approval of the Economic Planning Unit of the Prime Minister’s Department of Malaysia and the approval of the Federal Territory of Kuala Lumpur Land Executive Committee as well as completing all conditions and listing requirements imposed by the Singapore Exchange Securities Trading Ltd.

The proposed sale is expected to be completed by July 2019.

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Boustead gives out vessel job worth RM203.8m

Boustead gives out vessel job worth RM203.8m

October 02, 2012

KUALA LUMPUR, Oct 2 – Boustead Holdings Bhd’s unit, Boustead Naval Shipyard Sdn Bhd (BNS), has issued a letter of award (LOA) to Contraves Advanced Devices Sdn Bhd (CAD), in relation to the RM203.79 million contract for Second Generation Patrol Vessels/Littoral Combat Ships.
CAD is a subsidiary of Boustead Heavy Industries Corp (BHIC).
The LOA covers an implementation period of up to 10 years.
“The commencement date of the awarded works is Oct 2, 2012,” said Boustead Holdings in a filing to Bursa Malaysia today.
The company added that the LOA awards to CAD, a contract to procure, engineer, and integrate into the DCNS SETIS Combat Management System, a Combined Integrated Communication System and Communications ESM system.
The awarded works are expected to have a positive impact on the earnings of the company for the financial year ending Dec. 31, 2012 and subsequent financial years, as the tenure of the awarded works is long term in nature. – Bernama

BTIMES
Contraves wins combat vessel job
Boustead Holdings Bhd's unit, Boustead Naval Shipyard Sdn Bhd (BNS), has issued a letter of award (LOA) to Contraves
Advanced Devices Sdn Bhd (CAD), in relation to the RM203.79 million contract for Second Generation Patrol Vessels/Littoral Combat Ships.
CAD is a subsidiary of Boustead Heavy Industries Corp (BHIC). The LOA covers an implementation period of up to 10 years.
"The commencement date of the awarded works is Oct 2, 2012," said Boustead Holdings in a filing to Bursa Malaysia today.
The company added that the LOA awards to CAD, a contract to procure, engineer, and integrate into the DCNS SETIS Combat Management System, a Combined Integrated Communication System and Communications ESM system.
The awarded works are expected to have a positive impact on the earnings of the company for the financial year ending Dec. 31, 2012 and subsequent financial years, as the tenure of the awarded works is long term in nature. -- Bernama

video coverage -LIMA 2011

BH Online - Lima 2011 coverage

BNS may start work on patrol vessels next year

THE construction of six patrol vessels by Boustead Heavy Industries Corp Bhd (BHIC), a maritime engineering and defence-related services provider, may only begin as early as the fourth quarter of next year.
Analysts estimate that it can easily take another year before BHIC’s letter of intent (LOI) is firmed up and construction of the patrol vessels begin.
“This is as seen with the company’s Scorpene service job, which took a year for the LOI to be firmed up via the letter of award,” ECM Libra said in a research report.

According to HwangDBS Vickers Research, the six second-generation patrol vessels will be built at BHIC’s Lumut shipyard, which is currently 50% utilised.

BHIC received a LOI from the local Defence Ministry to construct six second-generation patrol vessels with combatant capabilities.
In its filing with Bursa Malaysia on Monday, the company says its associate company, Boustead Naval Shipyard Sdn Bhd (BN Shipyard), received the letter dated Oct 15. It adds that the value and duration of the project are to be negotiated with the Government.
However, AmResearch Sdn Bhd says the value of the six new patrol vessels can reach RM8bil, based on a 20% mark-up from the first batch’s price tag of RM6.7bil.
“We understand that the letter of award will be despatched over the next four to six months after the price has been finalised,” it says.
ECM Libra adds that the new order for six patrol vessels with combatant capabilities, littoral combatant ships, has more technical specifications than the first-generation batch which amounted to some RM1bil per vessel.
“We believe per unit cost should be higher. Assuming a value of RM1.2bil per vessel, the contract will provide BN Shipyard with an RM7.2bil orderbook that will likely last it five to seven years,” it adds.
The recent contract, which has been long awaited, is part of a privatisation agreement with the Government for the construction of 27 units of patrol vessels, where six have been completed.
In 1998, BN Shipyard was awarded a contract to construct and deliver six patrol vessels to the Royal Malaysian Navy. The first two were delivered in 2006, followed by two more in 2009. The first two are being used to patrol the waters off Sabah and Sarawak while the third and fourth patrol vessels are guarding the east coast of the peninsula.
According to the BHIC’s 2009 annual report, the remaining two patrol vessels were launched in November 2008 and July last year respectively.
HwangDBS Vickers Research says the second-generation patrol vessels will be built at BHIC’s Lumut shipyard, which is currently 50% utilised. However, AmResearch estimates that 30% of BN Shipyard’s contract will be undertaken by BHIC’s Penang shipyard (Jerejak).
AmResearch has upgraded its call on the stock from a “hold” to “buy” with raised fair value of RM5.50 per share by removing the 20% discount to its unchanged sum-of-parts valuation of RM5.50 per share.
“Our fair value implies a financial year 2011 (FY11) forecast PE (price/earnings) of 10 times. The stock currently trades at an attractive FY11 forecast PE of eight times, which is a bargain for the sole military yard in the country with massive order book prospects,” it said.
BHIC was awarded a contract worth some RM1.3bil by the government to service the two Royal Malaysian Navy Prime Minister-class Scorpene submarines in August.
The contract was given to its subsidiary, Boustead DCNS Naval Corp Sdn Bhd, a joint venture with DCNS SA, a French defence company, and was effective for a period ending Nov 30, 2015.
The contract differed in value from the original letter of intent of RM600mil dated June 4, 2009 due to the inclusion of a full submarine integrated logistics support package.
AmResearch points out that the group’s earnings track record has disappointed in the past year and it maintains FY10 to FY12 forecast earnings pending a significant quarterly earnings improvement and the actual award of the new patrol vessels contract.
For the six months ended June 30, BHIC’s net profit was down 4% to RM31.5mil as a result of cost escalations due to delays in completing certain shipbuilding projects, coupled with reduced contribution from associates. Revenue fell 18% to RM192.9mil from a year ago.
“But the LOI indicates a new flow of awards is likely to gather momentum, which could catalyse a re-rating on the stock,” it adds.
Other potential contracts in the pipeline include new maintenance contracts for the first two patrol vessels, which were delivered in 2006, potentially worth up to RM60mil per annum, and two patrol vessels, worth RM500mil each, for the Malaysian Maritime Enforcement Agency (MMEA).
This is on top of the RM130.7mil contract secured by BHIC from the Government to design, construct and commission 10 units of fast interceptor craft for MMEA.