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BIMBSec - Petronas FLNG - 20120319

BIMBSec - Petronas FLNG - 20120319

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According to a newswire, a formal tender has been issued out by Petronas for the supply of its second Floating Liquefied Natural Gas (“FLNG”). The FLNG which will have a capacity of 1.5 mpta will go through a competitive bidding process which so far attracted 4 groups. Same as its first FLNG, the location for the vessel’s deployment is unknown though it was highly speculated that it will be turret moored at the Rotan field offshore Sarawak which is undergoing development by Murphy.
According to a newswire, a formal tender has been issued out by Petronas for the supply of its second Floating Liquefied Natural Gas (“FLNG”). The FLNG which will have a capacity of 1.5 mpta will go through a competitive bidding process which so far attracted 4 groups. Same as its first FLNG, the location for the vessel’s deployment is unknown though it was highly speculated that it will be turret moored at the Rotan field offshore Sarawak which is undergoing development by Murphy.

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Published by: Bimb Sec on Mar 19, 2012
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05/19/2013

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BIMB SECURITIES RESEARCH
MARKET INSIGHT
Monday, 19 March, 2012
PP16795/03/2012(029624)
 
| 1
News Flash 
Calling Second FLNG 
Chiong Tong Chai
 
 
03-26918887 ext 175
 
According to a newswire, a formal tender has been issued out by Petronas forthe supply of its second Floating Liquefied Natural Gas
(“FLNG”)
. The FLNGwhich will have a capacity of 1.5 mpta will go through a competitive biddingprocess which so far attracted 4 groups. Same as its first FLNG, the location
for the vessel’s deployment is unknown though it was highly speculated that
it will be turret moored at the Rotan field offshore Sarawak which isundergoing development by Murphy.The second FLNG.
Unlike the first FLNG which has a smaller capacity of between 1-1.2 mtpa which was awarded via direct negotiation with Technipand Daewoo, this second FLNG will go through competitive bidding. MMHEreportedly has
teamed up with Technip and South Korean’s
Hyundai HeavyIndustries for the bid. There are 3 other competing groups, including 2 groupsled by Daewoo and Samsung Heavy Industries. Petronas will choose 2 winnersamongst the bidding groups
for the Front End Engineering and Design (“FEED”)
 job. The FEED will be awarded in June and likely to take up to 10 months tocomplete before the engineering, procurement, construction and installationcontract is awarded. This means vessel construction which will take 3 years tocomplete will only commence the earliest in 2
nd
half 2013 with delivery in 2016.
MMHE
 –
a long journey.
First we see the synergetic alliance between MMHEand Technip is starting to see its impact as it allows both to offer end to endsolutions for platform related jobs
by tapping into each other’s expertise.
Nevertheless, it remains to be s
een particularly on MMHE’s part in beefing up
its project execution capabilities from technical and commercial perspectivesfor the alliance to achieve greater market coverage
and clients’ trust
. As of now, MMHE is still very much domestic centric versus the smaller Kencanawhich has made presence in the regional markets. As for this bid, it would be along journey for MMHE before it could taste meaningful bottomlinecontribution from the project which we envisaged only to see from FY14onwards. MMHE is likely to undertake topsides fabrication while Hyundai onthe vessel construction. In the immediate term, earnings continue to be cappedby its relatively small orderbook of RM3bn (circa 0.9x of CY11 revenue) whilenew order will only likely to flow in in 2
nd
half 2012 with earnings contributiononly visible commencing FY13. In the meantime the company has announcedthe dateline extension for the fulfilment of the conditions precedent stipulated
under the SPA with the vendor for the purchase of Sime Darby’s ya
rd to end of 
March from initial’s 16 March, we maintain the acquisition will be completed in
2Q as guided by the management. Maintain
Sell
with
Target Price RM4.76.
 

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