bimbsec - oil gas - 20120720 - sector update - unleashing more

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BIMB SECURITIES RESEARCH

MARKET INSIGHTFriday, 20 July, 2012

Sector Update

PP16795/03/2013(031743)

www.bimbsec.com.my | 1

Overweight

Oil & Gas Sector UpdateUnleashing More

Chiong Tong Chai

[email protected]

03-26918887 ext 175

North Malay Basin. With the conclusion of the 3 PSCs between Hess and Petronas

for the development of the much awaited USD5.2bn North Malaysia Basin high CO2

content marginal gas fields, attention is now switched to the award of contracts.

Specifically, with first gas through Early Production System (EPS) targeted to come

on stream by 1Q 2013, we are expecting almost immediate requirements for

fabrication, drilling, mobile production units, pipe coating (tender will be issued out

soon), OSV and floating solution (awarded to Emas Offshore). While over a longer

term, comprehensive Full Field Development (FFD) would offer more robust

demand for fabrication (at least 7 new platforms of various size are required),process equipment, OSV, installation, hook-up and commissioning services as well

as construction works for onshore facilities. Hess has indicated its net investment in

FY12 for the project to be around USD250m and to pick up to USD400m p.a for

2013-15, suggesting prospective increase in contract flows.

On KBM Cluster. With an estimated development cost of approximately USD1bn ,

the project is now in an exciting phase as Coastal Energy is seeking for a local

company to participate up to 40% in the project with Petra Energy touted as the

front runner, a speculation that further spice up the recent acquisition of 26.9%

stake by Wah Seong. While Coastal Energy has yet to disclose the clusters full

development scheme, announcement by the company which has pointed towards

utilization of MOPUs and FSO are positive for local service providers though we wish

to highlight that from the development of Berantai and Balai marginal fields, RSCplayers seems to prefer to own some of these assets rather than entering into

leasing arrangement with third party solution providers. As for the remaining 5

cluster of marginal fields, we see SapuraKencana, Dialog and Bumi Armada as the

major hopefuls.

More risk to our FY12 numbers. While we continue to favour domestic oilfield

services sector which mainly derived its strength from Petronas capex fire round

and expect 2H to be a more vibrant vis-a-vis the 1H, slower than expected contract

award continue to challenge our short term estimates particularly amongst the big

boys. Our target price for Uzma has been adjusted from RM2.70 to RM1.80

subsequent to the recent 1-for-2 bonus issue, still our top call for small cap

exposure.

View and recommendation. We continue to Overweight the sector. Maintain Buy

on Dayang (TP: RM2.43), Dialog (TP: RM2.78), Uzma (TP: RM1.80) while Trading

Buy on Wah Seong (TP: RM2.28), Neutral on Bumi Armada (TP: RM4.44) and Sell on

MMHE (TP: RM4.37).

Companies PriceMarket

CapCore Net Profit (RMm) PER (x)

FY12 Div

YieldROE

Target

PriceRating

(RM) (RMm) FY11 FY12 FY13 FY11 FY12 FY13 (%) (%) (RM)

Bumi Armada 3.98 11,655 359.7 564.8 718.5 32.4 20.6 16.2 1.0% 24.3% 4.44 Neutral

Dayang 2.00 1,100 83.9 92.3 109.2 13.1 11.9 10.1 2.5% 15.7% 2.43 Buy

Dialog 2.46 5,919 152.3 176.5 213.0 38.9 33.5 27.8 1.3% 15.2% 2.78 Buy

MMHE 5.46 8,736 205.6 349.7 389.6 42.5 25.0 22.4 0.4% 12.8% 4.37 Sell

Uzma 1.36 180 12.1 23.8 31.7 14.9 7.6 5.7 2.0% 24.2% 1.80 Buy

Wah Seong 1.98 1,534 110.4 115.0 130.9 13.6 13.0 11.5 3.5% 10.7% 2.28 T.Buy
mailto:[email protected]:[email protected]:[email protected]


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20 July 2012 Sector Outlook: Oil & Gas (Overweight)


Corporate Activities June 12

Date Company Nature Remarks

04/06/2012 Alam MartimAsset

Acquisition

Acquired an accommodation work barge via a

jointly controlled company for RM64.7m to

serve a contract by ExxonMobile.

11/06/2012 YinsonAward of

Contract

Entered into consortium agreement with PTSC

for EPCI and bareboat charter contract for an

FPSO worth USD516m (firm) and USD221m

(option), hold 49% interest.

11/06/2012 UzmaAward of

Contract

Awarded a 3+1 contract for provision of

integrated water injection studies worth

RM36m from Petronas Carigali.

14/06/2012 TH HeavyAward of

Contract

Awarded fabrication contract worth

RM177.5m from Shell Sarawak for D12DR-A

and LADR-A development projects off

Sarawak.

20/06/2012 Bumi ArmadaAsset

Acquisition

Issued LOI to Nam Cheong to build 4 units of

DP2 Multi-Purpose Platform Support Vessels

with a call option of further 4 units at

USD130m.

21/06/2012 Wah SeongBusiness

Acquisition

Announced the successful bid for 26.9% stake

in Petra Energy. Subsequent update has put

the pricing at RM1.69 per share.

22/06/2012 Dialog MOU

Entered into MOU with Halliburton Energy

cooperates to pursue projects and/or

opportunities in the re-development of

mature oil fields in Malaysia.

27/06/2012 MMHE Award ofContract

Awarded fabrication contract worth RM278mfrom Shell Sarawak for F14/F29 fields off

Sarawak.

28/06/2012 Perdana PetroleumAward of

Contract

Awarded a 2+1 charter contract for an AHTS

worth RM86m from Murphy Sabah/ Sarawak.

27/06/2012 Daya MaterialsIncorporation

of Business

Signed a Participation Agreement committing

to establish a Joint Venture Company for the

purpose of undertaking the development of

certain identified marginal fields with Hydra

Energy.

Contract Secured YTD June 12

CompanyContract Value

(RMm)

SapuraKencana 2,637.9

Bumi Armada 1,065.0

Yinson 758.7

Uzma 386.0

MMHE 278.0

Others 737.7

Total 5,863.3

Contract Secured YTD By Markets


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On-going bidding highlights

Tender by Descriptions Potential players

ExxonMobile

Malaysia

Contract for fabrication of a wellhead

platform weighing below 4k tonnes for

Damar gas development.

MMHE is reportedly set to clinch the

contract with contract valued at

RM200m.

Carigali Hess Contract for fabrication of a gas

compression platform weighing 25k

tonnes for Block A-18. Hyundai Heavy

Industries is reportedly the most

competitive bidder with bid valued

around USD400m.

Other contenders include MMHE,

SapuraKencana, SOME, Larsen &

Toubro and Nippon Steel.

Petronas Front-end engineering and design contract

for Malaysias second floating liquefied

natural gas vessel.

As the FEED for FLNG is a new for

local engineering outfits, the

competition only involve three

foreign consortiums lead by JGC,

Toyo Engineering and Technip.

Petronas Contract to supply the worlds first

Chemical EOR vessel for Angsi field. MISC

has been approached for the contract

which means other keen players likely to

be disappointed.

MISC, Bumi Armada, SapuraKencana

O&G Stocks Share Price Performance

Source: Bloomberg, BIMBSec


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Crude Price Spot Brent

source: Bloomberg, BIMBSec


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DEFINITION OF RATINGS

BIMB Securities uses the following rating system:

STOCK RECOMMENDATION

BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months.TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain.

NEUTRAL Share price may fall within the range of +/- 10% over the next 12 months

TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels.

TRADING SELL Share price may fall by more than 15% in the next 3 months.

SELL Share price may fall by more than 10% over the next 12 months.

NOT RATED Stock is not within regular research coverage.

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 monthsUNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary

market index 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.

Published by

BIMB SECURITIES SDN BHD (290163-X)

A Participating Organisation of Bursa Malaysia Securities Berhad

Level 32, Menara Multi Purpose, Capital Square,

No. 8 Jalan Munshi Abdullah,

50100 Kuala Lumpur

Tel: 03-2691 8887, Fax: 03-2691 1262 Kenny Yee

http://www.bimbsec.com.my Head of Research
http://www.bimbsec.com.my/http://www.bimbsec.com.my/http://www.bimbsec.com.my/

bimbsec - oil gas - 20120720 - sector update - unleashing more

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