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MARKET INSIGHT
PP16795/03/2013(031743)
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9 July 2012 Petronas is speculated to put up a tender for a processing platform of up to 25k tonnes and 7 satellite platforms for the Bokor redevelopment programme by end of this year. The redevelopment programme is part of the USD12bn production sharing contract (PSC) deal between Petronas and Shell signed early of this year to realize 750m barrels of oil reserves and to boost the recovery rate for the Baram Delta and four fields in the North Sabah development area from 36% to 50% through various Enhanced Oil Recovery (EOR) initiatives. Bokor is a candidate for in-fill drilling plus water-alternate-gas enhanced oil recovery development aimed at lifting output to 140,000 barrels per day (bpd), up from the current 60,000 bpd. This tender is largely expected and should it be tendered out by end of the year, we expect it would be awarded in the first half of next year. However, we were surprised with the report that Petronas has extended the expressions of interest for the job to regional yards i.e Singapore and Indonesia, a departure from its traditional policy on local preference. Historically, international bids were only largely observed for field developments in Malaysia-Thailand Joint Development Area and Malaysia-Vietnam Commercial Arrangement Area. It was suggested that, Petronas intentions in doing so is to put cost under control and to ensure fast project execution through EPCIC contract. With this, we expect pricing is now getting even more competitive and could also further put smaller domestic players into a more challenging position as they do not offer full suite of services to cater for EPCIC contract. It was also quoted that tenders for two other billion Ringgit platform contracts i.e Semarang and Dulang, are also likely to be issued out this year as both are targeting to hit production start-up in 2015. Our view. We continue to Overweight the sector. Maintain Buy on Dayang (TP: RM2.43), Dialog (TP: RM2.78), Uzma (TP: RM2.70) while Trading Buy on Wah Seong (TP: RM2.28), Neutral on Bumi Armada (TP: RM4.44) and Sell on MMHE (TP: RM4.37).
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9 July 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system: STOCK RECOMMENDATION BUY OUTPERFORM TRADING BUY NEUTRAL TRADING SELL SELL
Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months The stock is expected to perform ahead of the market in the next 12 months The stock is expected to outperform the market in the next 3 months The stock is expected to perform in line with the market in the next 12 months The stock is expected to underperform the market in the next 3 months An expected price depreciation of more than 10% in the next 12 months
SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market ndex over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of BIMB securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.
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