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Reports Malaysia

Malaysia stock market and companies daily report (March 28, 2014)

March 28, 2014, Friday, 05:32 GMT | 01:32 EST | 10:02 IST | 12:32 SGT
Contributed by Shares Investment

Petronas To Raise Oil Output By 150,000bpd

- Petroliam Nasional (Petronas) is aiming to increase its oil production by 150,000 barrels per day (bpd) by 2020 via the ongoing improved oil recovery (IOR) and enhanced oil recovery (EOR) initiatives, especially on brownfield sites.

- Petronas note that with the IOR and EOR initiatives, oil recovery could be enhanced by up to 50 percent from the fields’ collective Stock Tank Oil Initially In Place (Stoiip) of about 20 billion barrels. Malaysian oilfields have a combined Stoiip of about 20 billion barrels, with average recovery factor at about 35 percent.

- Currently, Petronas has already started implementing EOR on its Tapis field offshore Terengganu, with 13 other EOR projects in the pipeline. EOR is also part of the 12 Entry Point Projects under the National Key Economic Areas set out by the government.

Significance: Petronas’ initiatives have proven to be successful in arresting the decline of domestic oil production to just about 3.2 percent per annum instead of as much as eight to ten percent per year.

TM Partners Green Packet And SK Telekom

- Telekom Malaysia (TM) entered into an investment agreement with Green Packet and SK Telecom to collaborate on developing a next-generation long-term evolution (LTE) infrastructure to offer customers a full-suite of converged communications services.

- TM will pay RM350 million for a 57 percent stake in Packet One Networks. The company will also additionally invest up to RM210 million into Green Packet via newly issued redeemable exchangeable bonds, which can be exchanged for Green Packet’s stake in Packet One Networks in future.

- TM, Green Packet and SK Telecom also plans to invest a further RM1.65 billion in Packet One Networks in the next three to five years to fund the latter’s business expansion.

Significance: The partnership is beneficial to the parties as Packet One Networks provides an LTE-ready platform for TM to roll out wireless broadband products and accelerate time-to-market for its customers while TM will help anchor the growth and development of Packet One Networks.

Kimlun’s Order Book Stands At RM2.3b

- Kimlun Corporation’s subsidiary, SPC Industries, had been awarded a S$20.5 million (RM51.3 million) contract by Shanghai Tunnel Engineering Company for the supply and delivery of precast concrete segment to contract T206, Thomson Line of Singapore MRT system.

- The contract is expected to spread over a period of approximately 36 months. Kimlun is expected to win more of such projects based on its experience and good track record on the ongoing Downtown Line and this will bode well for its manufacturing segment.

- Assuming a conservative net margin of 10 percent, this contract should translate into RM5.1 million to Kimlun’s bottom line.

Significance: The contract win will boost Kimlun’s outstanding order book closer to RM2.3 billion, providing earnings visibility for the next two years. Nonetheless, Kenanga Research maintains “Underperform” with target price of RM1.55 as the contract value is well within the house’s order book replenishment assumptions and dilution due to its rights issue.