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Reports Malaysia

Malaysia stock market and companies daily report (April 01, 2014)

April 1, 2014, Tuesday, 05:11 GMT | 00:11 EST | 08:41 IST | 11:11 SGT
Contributed by Shares Investment

Bumi Armada Secures US$2.9b Letter Of Intent

- In a statement to Bursa Malaysia, Bumi Armada said it has received a letter of intent from eni Angola for a contract worth US$2.9 billion (RM9.5 billion) for the chartering, operation and maintenance of a floating, production, storage and offloading (FPSO) tanker facility in Angola.

- The letter of intent is construed as an interim agreement under which Bumi Armada’s wholly-owned subsidiary Bumi Armada Offshore Holdings and Angoil Bumi JV are to proceed to commence work related to the contract ahead of the final award, which is subject to successful negotiations of the commercial terms and execution of the contract, expected within 120 calendar days after 28 March.

- This is a repeat contract from eni for an FPSO in West Africa, and is a testament of Bumi’s strong collaboration with its repeat customer using its tried and tested value chain as it have done in the past to successfully deliver the last project.

Significance: Bumi Armada’s chief executive officer Hassan Basma said the project is the company’s first very large crude carrier tanker conversion, utilizing its Armada Ali tanker. The latest FPSO conversion, to be delivered in 31 months will take Bumi Armada’s FPSO fleet to eight.

MMHE And Technip Favourites For RM3b Kasawari Project

- AmResearch views that Malaysia Marine & Heavy Engineering Holdings (MMHE) and Technip are believed to be the favourites for the RM3 billion job from Petronas Carigali for the design and construction of a multi-platform project at the Kasawari field located offshore Sarawak.

- The Kasawari field project is the second such project in the area known as Block SK316. The tender for the project is expected to be out by May this year, and is for the parallel front-end engineering and design (FEED) studies to build a multi-platform project at the field.

- AmResearch noted that Technip took the lead in the conceptual studies of the Kasawari field development, while the joint venture between Technip and MMHE had eventually secured the contract for the first standalone multi-platform development in Block SK316.

Significance: AmResearch opines that the winner for this parallel FEED contest would also stand the best chance to secure the engineering, procurement, construction, installation and commissioning contract for the project.

HLIB Research Maintains “Hold” Rating On Uzma, Target Price RM6.16

- Reports have quoted that Petroliam Nasional (Petronas) has awarded the fifth risk service contract to Uzma and British EnQuest at the Offshore Technology Conference Asia, which ended in Kuala Lumpur on 28 March.

- HLIB Research views the fifth risk service contract might refer to the Tanjung Baram field which requires capital expenditure of approximately US$100 million. Assuming a project internal rate of return of 20 percent and a project stake of 30 percent, we estimate that it will contribute approximately RM14 million to Uzma’s bottom line once production begins.

- To recap, Uzma recently proposed a renounceable rights issue of up to 132 million rights shares on the basis of one rights share for every one existing share, which is expected to raise up to RM90 million. The research house believes the funds raised will be used for potential special projects such as marginal fields and enhanced oil recovery.

Significance: HLIB Research maintains “Hold” rating with an unchanged target price of RM6.16 on Uzma based on 16 times FY15 earnings per share of RM0.385.