Alam Maritim: Maintain buy, target price unchanged RM1.50

Alam Maritim: Maintain buy, target price unchanged RM1.50 2011/04/16 OSK Research believes Alam Maritim Resources Bhd's (5115)outlook should brighten going forward as development of marginal oilfields would raise the need for more vessels. It said the company is gradually recovering from the unfavourable offshore support vessel market due to the lack of new vessel contracts. The research house is maintaining its "buy" call, with an unchanged target price based on the existing price earnings ratio of 15 times financial year 2011 earnings per share. Despite these positive news, OSK is maintaining its financial year 2011 forecast as it has earlier assumed Alam Maritim's vessels would have contracts based on management's guided utilisation rate of about 70 per cent. The research house said what is more important for the vessel operators based on the current operating environment is to boost their utilisation rates, rather than getting high charter rates. This is because any incremental gain in the charter rate of about 10 to 20 per cent would still be insignificant compared to bearing the cost of an unutilised vessel, which OSK estimates would make up about 50 per cent of the charter rate. Hence, due to the scarcity of new vessel contracts, it is important that vessel operators get their vessels sailing and out of the dock.

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CIMB still 'overweight' on oil & gas

CIMB still 'overweight' on oil & gas 2011/06/11 KUALA LUMPUR: CIMB Research is maintaining its "overweight" recommendation on the oil and gas sector as higher oil prices and steady demand have helped the sector's capital expenditure (capex) to stage a welcome recovery. "Global upstream capex could hit a new high of US$410 billion (RM1.2 billion) this year. Petronas' five-year capex target is RM250 billion, translating into annual capex of RM50 billion, which would be a new record," it said in a note. Although Petronas did not disclose the segmental breakdown for its planned capex, CIMB Research expects 64 per cent of it, or RM32 billion would go into exploration & production activities. The spending will benefit the broader sector, but drillers and fabricators will be the big winners. The research house said the recently-concluded first quarter 2011 reporting season saw the sector's best performance since he fourth quarter 2008 when it started its quarterly reviews. "For the first time, all stocks met or beat our expectations. We remain overweight on the sector and maintain all our stock recommendations, earnings forecasts and target prices. "The Economic Transformation Programme newsflow is a potential rerating catalyst for the sector, along with more contract awards," it said. SapuraCrest remains CIMB Research's top pick. Its massive RM13 billion order book is second to none and will sustain the company for the next four years, it said. The research house said despite a healthy first quarter performance earnings-wise, the share prices of oil and gas stocks in its coverage had edged up an average of only 1.6 per cent since the results season started on May 3, tracking the 1.3 per cent uptick in the FBM KLCI. This is attributed to profit-taking as the share prices had risen by an average of 23 per cent year-to-date, which is well above the FBM KLCI's two per cent. "All the oil and gas stocks in our portfolio, with the exception of Petra Perdana, have outperformed the FBM KLCI since the start of the year. "Dialog is the star performer, outpacing the benchmark index by a whopping 54 per cent. Our newest coverage Perisai came in second with a 38 per cent outperformance, followed by Petronas Dagangan at third place with 37 per cent," it said.

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Petronas maintenance works over, gas flows again 2011/06/11 KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) yesterday said it has completed the maintenance works of its gas production facilities and has begun resupplying to its customers. Responding to a media report that Tenaga Nasional Bhd is purchasing power from Singapore due to a shutdown of Petronas' gas production platforms, the national oil company said the shutdown was a planned one and its customers were aware of it. "The maintenance works were successfully completed as per their schedules and the supply situation to the customers has since improved," it said. Petronas explained that the maintenance works on an offshore production facility was carried out from April 19 to April 26, while at an onshore crude processing facility from May 26 to June 4 this year. The exercises, it added, were to ensure the integrity of the systems and processes at the facilities and required their total shutdown. This has resulted in a reduction of supply of natural gas to its customers after it curtailed supply including to the power sector. Prior to the shutdown, discussions were held with customers, Petronas said, adding that they were notified in advance of the shutdowns to allow for mitigation measures. A Reuters report said that Singapore is keen to let its power generating firms continue selling electricity to Malaysia beyond a June 15 deadline. The maintenance shutdown of Petronas facility has resulted in TNB importing electricity from PowerSeraya Ltd until June 15. TNB chief executive Datuk Che Khalib Mohammad Noh has been quoted by a local daily as saying that the purchase was only for 180 megawatts, representing 1.5 per cent of its total demand.

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Petronas Chem on acquisition trail

Petronas Chem on acquisition trail By Zaidi Isham Ismail xydee@nstp.com.my 2011/06/11 The selective acquisition could be in the setting up of a new plant, joint ventures or buying stakes in other firms, says Petronas Chemicals president Kertih: Petronas Chemicals Group Bhd, which has a war chest of RM8 billion, is eyeing strategic acquisitions in the country and the region to consolidate its position as one of Southeast Asia's largest integrated petrochemical producers. Petronas Chemicals president and chief executive officer Dr Abd Hapiz Abdullah said the expansion plan will be selective and synergistic as well as add growth, value and competitiveness to the group. "The selective acquisition could be in the setting up of a new plant, joint ventures or buying stakes in other firms. "We are talking with several parties right now but they are at a very preliminary stage. "Rest assured, this is part of our reinforced commitment and strategy to grow our business," Abd Hapiz told some ten visiting jounalists here at its sprawling 5,000ha complex on Thursday. Abd Hapiz said Petronas Chemicals is flexible when it comes to holding discussions but it will all depend on how to set objectives on growing its business. "Sitting on a big cash pile helps a little bit on how you look at growing the business. We are going to have selective opportunity acquisitions in the future," he said. Petronas Chemicals is the chemical arm of national oil and gas corporation Petroliam Nasional Bhd (Petronas). The group floated its shares on Bursa Malaysia last November, raising RM12.8 billion which is Southeast Asia's largest initital public offering to date. Established in 1985, Petronas Chemicals has 22 subsidiaries. They comprise wholly-owned and partly-owned subsidiaries, joint ventures and associate companies which it has been forging in the past 26 years. These include its US$660 million (RM1.99 billion) purchase of Optimal group of companies in 2009 from US-based Dow Chemical Co, the world's oldest chemical company. Last year, Petronas Chemicals bought UK-based BP plc's 15 per cent stake and 60 per cent interest in Ethylene Malaysia Sdn Bhd and Polyethylene Malaysia Sdn Bhd, respectively, for a combined US$363 million (RM101 billion) cash. Petronas Chemicals chief financial officer Wan Shamilah Saidi said the group was able to make both purchases in a timely and quick manner without going to the market to raise funds. The group has no firm plans and a timeframe on its selective opportunistic acquisitions. After the listing, Petronas Chemicals is a 64.4 per cent subsidiary of Petronas with a market capitalisation of over RM47 billion. It is one of Bursa Malaysia's top 15 companies and a component of the FTSE Bursa Malaysia Kuala Lumpur Composite Index.

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Buoyant outlook- Bumi Armada

Buoyant outlook By Zurinna Raja Adam zurinna@nstp.com.my 2011/06/13 Singapore: Bumi Armada Berhad, the country's largest offshore supply vessel (OSV) operator, plans to be among the top five floating production, storage and offloading (FPSO) vessel player in the world by 2014. Bumi Armada, enroute to a listing on the Main Market of Bursa Malaysia, currently has 43 OSVs in its fleet, but is banking on making a big splash in the FPSO field. It currently is the eighth largest FPSO player in the world serving some 22 countries across Asia, Africa and Latin America. The group currently owns three FPSOs and aims to add at least one more vessel each year. It has a projected investment of between RM6 billion and RM7 billion over the next three years. Bumi Armada plans to raise nearly US$1 billion (RM3.02 billion) from its initial public offer (IPO), which could take place by as early as this month. The IPO, one of the largest announced in Southeast Asia this year, has been delayed several times over the past few years. "We are going to the capital market to have a good dose of equity. We believe this exercise will help to grow the company further," said director and chief executive officer Hassan Basma in Singapore. Bumi Armada was privatised in 2003 by tycoon T. Ananda Krishnan, who is the major shareholder of the company via its company Usaha Tegas Sdn Bhd. A planned relisting in 2008 was delayed due to the global financial crisis. Over the weekend, Bumi Armada announced the completion of its third FPSO, Armada TGT 1, which will leave Keppel Shipyard in Tuas for Vietnam to work for Hoang Long joint operating company next month. The first oil production, meanwhile, is scheduled for August 2011. "The conversion of our FPSO with production capacity of 55,000 barrels per day, was completed on schedule in 22 months. As we speak, our teams are at site installing the preset mooring system, midway arch and flexible risers in preparation for her arrival and the start of a seven-year charter," said Hassan. The Bumi Armada and Vietnamese group Vietsovpetro (VSP) alliance was awarded the contract in November 2009 for the leasing and operation of the vessel for a fixed time charter of seven years with the option to extend up to 15 years. Capital expenditure involved is about US$350 million (RM1.05 billion) for the vessel with returns of US$700 million (RM2.1 billion) paid yearly over the next seven years. Bumi Armada specialises in offshore support activities and is the only Malaysian company that owns FPSO vessels which carry a pre-mium lease rate. Its first two FPSOs Armada Perkasa and Armada Perdana have been operating off Nigeria since March 2008 and July 2009 respectively. FPSO division commands about 48 per cent of the group's revenue.

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