Malaysia’s oil and gas acquisitions are expected to total RM15bil this year

PETALING JAYA: Malaysia's oil and gas (O&G) acquisitions are expected to total between RM10bil and RM15bil this year, as players look to acquire expertise and reserves out of their horizon to ride sectoral growth.

Singapore-based Deloitte & Touche LLP's tax partner and leader for South-East Asia mergers and acquisitions Steven Yap said that this would likely be seen within the upstream and midstream segments.

“This (projected) figure of RM10bilRM15bil this year is not going to be surprising. Should Petroliam Nasional Bhd (Petronas) decide to (launch another) acquisition offer for MISC Bhd, you would easily meet RM10bil quite fast. It can be quite huge,” Yap said at a press briefing at the Deloitte O&G Summit yesterday.

He noted that acquisitions within the O&G sector were not only limited to the local front but were increasingly becoming more international as well.

Deloitte Malaysia's corporate finance and financial advisory servicesexecutive director Nizar Najib said that this was in line with the global trend of huge capital expenditure allocation budgets.

On this note, Nizar said the marginal oilfields financing space might see smaller players with very limited financing capacity facing difficulties.

“Not many local companies have this sort of financial capacity. If you look at the smaller offshore support vessels, their chances are a bit slim, given that they would need bigger capacities and higher gearing to boot. The ones that have secured the contracts thus far are the big boys:SapuraKencana Petroleum Bhd, Dialog Group Bhd and Petra Energy Bhd, as they would need the financial capacity for these (projects),” he said.

“We foresee that for the next round of risk service contracts (from Petronas), if the first mover players like SapuraKencana and Dialog execute their contracts well, this could very well see them (being) at the forefront for subsequent contracts,” Nizar added.

Moving forward, Nizar said that institutional investors such as pension funds and private equity firms could start to pour more money into the O&G sector due to high demand for upfront investments that had to be made in the industry.

“Not many local players have this kind of capacity today. Don't be surprised when institutional investors such as Permodalan Nasional Bhd, the Employees Provident Fund and Lembaga Tabung Angkatan Tenterajump on the bandwagon as well,” he said.

KNM Secured RM308m Russian Deal

KNM Holdings Bhd (KNM) wholly owned subsidiary KNM Process Systems Sdn Bhd (KNMPS), has received Letter of Award (LOA) from TAIF-NK to supply a sulphur recovery unit (SRU) for the heavy residue conversion complex located at Nizhnekamsk, Republic of Tatarstan, Russia.


According to the research wing of Kenanga Investment Bank Bhd (Kenanga Research), the contract amounting to US$100 million (RM308.6 million) was estimated to be completed within 28 months.

The research house stated that the contract was KNM’s first material contract win in a long time

“We understand that the design and engineering works could start in second quarter of 2013 (2Q13), as such estimated completion date could be by mid-2015 to 3Q15.

“The contract will lift KNM order backlog to RM4.3 billion. However, we highlight that around 50 per cent of this order backlog is attributable to its long-awaited Peterborough project worth RM2.1 billion,” the research house explained.

The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) concurred that the group’s latest reported order book stood at RM1.9 billion as of 3Q12 (excluding the RM2.1 billion Peterborough project and the RM0.7 billion Orizon project), from RM1.6 billion in 2Q12.

However, MIDF Research added that the current new orders were not keeping pace with its average quarterly burn rate of approximately RM600 million.

The group’s tender book is currently RM19 billion, with a typical management guided success rate of 18 per cent to 20 per cent.

Kenanga Research opined that the company’s FY12 net earnings were expected to be in the black due to its legacy loss-making projects would have been completed within CY12 and the efforts undertaken to improve cost efficiency and productivity.

Some plant capacity rationalisations were expected as certain plants seemed to be suffering from low utilisation and the Peterborough and Octagon projects were currently at status quo.

However, the company had targeted to secure financing for Peterborough soon.

MIDF Research stated the impact on FY13 earnings should be only about seven per cent.

Dayang Expected to Obtain More Jobs Worth RM7 Billion

Dayang Enterprise Holdings Bhd (Dayang) is expected to obtain more brownfield service tenders worth RM7 billion, as most of the existing projects in the field are due for renewal this year.

The company’s current order book stood at some RM1.2 billion and this would last until 2016, OSK Research Sdn Bhd (OSK Research) pointed out in its research report.

“Dayang’s first half of financial year 2012 (1HFY12) net profit came in within our consensus and expectations, with annualised net profit accounting for 49.3 per cent of our and 49.9 per cent of consensus full year estimates,” the research house commented on its recently announced result.

The company recorded an improvement in both its revenue and net profit, underpinned by a higher utilisation rate and additional revenue from the charter of its new workboat Dayang Topaz.

“There is also an increase in its marine charter business, which commands a higher profit margin. EBIT margins in 1HFY12 remained stable compared with 1HFY11 probably due to the company’s improvement in project delivery,” it added.

In tandem with the release of its results, Dayang also declared a first interim dividend of five sen, representing 50 per cent of OSK Research’s full year dividend forecast of 10 sen, which was based on its assumption of a 58 per cent payout ratio.

“The company recently published its annual report for 2011 so we are taking the opportunity to updat eour FY11 numbers retrospectively to reflect the changes,” said the research firm.

“While we make no adjustments to our earnings estimates, we are revising our fair value upwards to RM2.75 per share as wel roll over valuations to FY13,” it stated. The fair value was based on Dayang’s price earnings of 13 times FY13 earnings per share.

OSK Research continued to favour Dayang’s solid business model, which provided the company with recurring income and a constant cash flow.

RAMUNIA changed its name to TH HEAVY ENGINEERING BERHAD

Kindly be advised that RAMUNIA HOLDING BERHAD has changed its name to "TH HEAVY ENGINEERING BERHAD". As such, the Company’s securities will be traded and quoted under the new name with effect from 9.00 a.m., Thursday, 28 June 2012.

The Stock Short Name will be changed as follows:-

Type of Shares	Old Stock Short Name	New Stock Short Name
Ordinary Shares	RAMUNIA	THHEAVY
Warrants	RAMUNIA-WA	THHEAVY-WA

However, the Stock Number remains unchanged.

Handal unit gets RM120m Petronas Carigali job

Handal Resources Bhd's unit has secured a RM120mil contract from Petronas Carigali Sdn Bhd to provide integrated crane services.
It said on Monday Handal Offshore Services Sdn Bhd would provide the services over a five-year period, starting in June this year.
Handal expected the contract to contribute to the group's revenue and earnings and net assets per share for the financial year ending Dec 31, 2012.

Alam Maritim was awarded RM121.54 million contract from Petronas Carigali

Alam Maritim Resources Bhd’s (AMRB) wholly-owned subsidiary, Alam Maritim (M) Sdn Bhd, was awarded a RM121.54 million contract from Petronas Carigali Sdn Bhd to provide four work boats to support the latter’s Peninsular Malaysia operations’ painting activities.

The contract which started on May 25 2012, requires two AMRB’s work boats for one year with an extension option for another year, for each work boat.

The contract is to contribute positively to earnings and net assets of AMRB for the financial year ending December 31 2012 and beyond.