MOVING FORWARD Moving forward into 2023, we are seeing sustained recovery of the O&G sector as a result of an uptick global demand and geopolitical developments. Oil prices have reverted to 2014 highs while upstream cash flows are expected to reach new record levels in the following year. With OPEC+ having made the decision to cut oil production to stabilise the oil market, oil prices are expected to remain at high levels. This in turn will support the growth of capital spending in O&G engineering, procurement, construction and commissioning (EPCC) globally over the next five-year period. Within the OWF market, energy transition is driving global demand while the onshore market is seeing a USD267 billion capital injection in LNG infrastructure in the US, Vietnam, Canada and Australia for the short to medium term. Both the Marine and LNG market will continue to be impacted by major diversions in seaborne energy trade patterns and volume in the short to medium term. While it is expected that inter-basin trade will not be strong through to 2025 as LNG demand in Europe is maintained, in the longer term LNG shipping demand will continue to grow at a steady rate to address renewed demand for inter-basin trade. Going into the future, energy transition and maritime decarbonisation hold many promising growth opportunities for MHB. With the IMO’s EEXI and CII regulations coming into force in January 2023, there has been a market need from vessel owners to retrofit ships to comply with these new requirements. MHB is positioning itself as a yard that enables vessel retrofitting through partnerships with technology owners such as Silverstream Technologies and Bureau Veritas Solutions. Demand for CCS is also growing in line with energy transition and decarbonisation demands. MHB is well placed to capture further opportunities in this space by leveraging on the Kasawari CCS project that we were awarded in 2022. In addition, MHB will continue to engage asset owners such as PETRONAS and MISC for long term opportunities in a commercial CCS value chain in Malaysia, which may include fixed injection platforms and LCO2 transportation. We continued to advance with our OWF venture by participating in 13 prequalification active bidding exercises in 2022 by capitalising on our relationship with Smulders to build our credibility in the OWF space. This has seen us making inroads in establishing our footprint in key OWF markets such as Taiwan and Europe. As well as that, we are leveraging on our partnership with Kellogg Brown & Root Asia Pacific Pte Ltd, covering collaborations on offshore wind, onshore modular plants and offshore projects for the APAC region. In 2022, we strengthened our OWF capability by entering into a strategic alliance with Dyna-Mac Holdings Limited via its subsidiary Dyna-Mac Engineering Services Pte Ltd to conduct joint bidding exercises on international projects. Through this partnership, we will be able to offer clients a one-stop solution for module fabrication, vessel conversion and integration work. In 2022, MHB continued to implement our digitalisation strategy agenda through the digitalisation of our procurement processes. Known as the PANTHERA Project, it aims to integrate our procurement processes to ensure data transparency among our stakeholders, help us identify cost-saving opportunities and make better-informed decisions on our procurement activities based on data analysis. A key outcome during the year was the development of a vendor network and a frame agreement emphasising onshore modules. As at the end 2022, a total of close to 7,000 new vendors are on MHB’s Approved Vendor List. On top of that, we have improved the digital daily work checklist (DWC) system for better marine repair project monitoring and tracking. This has contributed to a reduction in production times and an increase in the accuracy of work done reports (WDR) and work completion reports (WCR) in our Marine operations. 2022 has seen considerable progress in our finance transformation roadmap to increase efficiencies in the finance function through the implementation of digitalisation and automation tools and the centralisation of functions. As at year end, we are close to completion and have targeted for the platform to go live in 2023. Upon completion, MHB’s finance function will transform from its traditional role to a data driven finance of the future with predictive and prescriptive capabilities anchored on a single source of truth. To ensure that our people are equipped with the digital skills they will require, we have provided our people with upskilling programmes to build their capabilities in conducting meaningful data analysis to make better, data-driven business decisions. MHB has continued to garner external awards and accolades, testament to our commitment to support energy transition and maritime decarbonisation. On 28 November 2022, MHB was honoured with the Silver Award in the Energy category at The Edge Malaysia ESG Awards 2022 recognising our commitment towards all aspects of Environmental, Social and Governance (ESG). As well as that MHB was awarded the Occupational Safety and Health Gold Class I award at the MSOSH Awards 2022, demonstrating our high quality Generative HSSE Culture. With the IMO’s EEXI and CII regulations coming into effect in 2023 in line with the maritime decarbonisation agenda, MHB is well placed to capture opportunities in this area. In 2022, we entered into two strategic partnerships to build our capabilities as follows: 1. Strategic partnership with a maritime clean technology company, Silverstream Technologies for Silverstream’s market-leading air lubrication technology, the Silverstream® System; and 2. Strategic partnership with Bureau Veritas Solutions for hull improvements including bulbous bow retrofits in compliance with EEXI and CII. Our new partnerships will enable us to support vessel owners and operators in their decarbonisation efforts. STRATEGIC PARTNERSHIPS TO CAPTURE MARITIME DECARBONISATION OPPORTUNITIES STRENGTHENED OUR OWF OFFERING PROGRESSING WITH OUR DIGITALISATION AGENDA CONTINUED OUR FINANCE TRANSFORMATION AWARDS AND ACCOLADES Based on our analysis of market conditions for the year ahead, MHB has identified the following strategic priorities for 2023: Heavy Engineering Fabrication Strengthen our regional footing on all fronts and establish a strong international presence as an EPCIC contractor to achieve our targeted profit margins Marine Repair & Conversion Aim to deliver on high value projects in tandem with our capability development agenda to sustain our targeted profit margins Modular & Serial Fabrication Establish our track record by winning contracts in offshore wind and onshore modular as well as explore opportunities in light engineering Plant Turnaround & Shutdown Maintenance Continue to secure projects from PETRONAS while penetrating nonPETRONAS and non-O&G segments Energy Transition and Decarbonisation Capitalising on our 2022 project wins to target customers seeking sustainable energy solutions Digitalisation Continue to drive our digitalisation agenda through the following initiatives: • Progressing with implementation of PANTHERA to optimise and digitalise end-to-end EPCIC supply chain management processes • Implement AWP to align engineering, procurement, and construction processes • Conduct a feasibility study on establishing a Process Technology Unit to further automate processes • Utilise automated welding to increase productivity for serial fabrication methods • Silver Award in the Energy category at The Edge Malaysia ESG Awards 2022 • Occupational Safety and Health Gold Class I award at the MSOSH Awards 2022 • Finance platform to go live in 2023 • Upskilling our people with digital capabilities • Approximately 7,000 new vendors are on MHB’s Approved Vendor List as part of PANTHERA Project • Improved DWC system for more accurate WDR and WCR 2 strategic partnerships to provide services for vessel retrofits in compliance with EEXI and CII requirements MARINE & HEAVY ENGINEERING • Participated in 13 prequalification active bidding exercises in 2022 • Entered into a strategic alliance with Dyna-Mac to conduct joint bidding exercises on international projects Business Review Business Review 129 128 MISC Berhad Integrated Annual Report 2022
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