Monday, 28 May, 2012

News Flash
News Continue to Run
i. Fred Olsen Production has reportedly pulled out from a potential charter contract for the Thang Long and Dong Do oilfields off Vietnam after failing to finalise an agreement. The charter contract was for a fixed period of seven years plus yearly options thereafter, with a scheduled start-up in the 3Q13. The floater would have initially processed oil from the Thang Long field in blocks 01/97 and 02/97 in the Cuu Long basin, followed by the Dong Do field at a later date, as part of the combined development of the two fields. For the record, Fred Olsen was issued with the Letter of Intent (LOI) end of last year after it overcame Bumi Armada’s bid. Since then the company had faced with substantial challenges to convert the LOI into a contract. As such, this development did not come as a big surprise to us and indeed is a positive development for Bumi Armada which have already resubmitted its tender for the contract on the request of Lam Son joint operating company, 50:50 co-own by PetroVietnam E&P and Petronas Carigali. We have yet to hear any other contenders for the contract and have placed Bumi Armada as the front runner for now. We hope to hear something from the management from today’s scheduled analyst briefing. ii. A joint bid from Turkish’s Ilk Construction and MMHE is reportedly as the frontrunner during the commercial round for the engineering, procurement and construction of the 6k tonne Central Diyabekir wellhead platform. Petronas is aiming to start up production in 2017. The other contenders include KNM and Leighton Holdings. This contract is for the phase two development of the Block 1 oil and gas project off Turkmenistan which is owned by Petronas. While it is made known of MMHE’s interest to continue with its participation in the development where it previously involved as the major contractor during the phase 1 development, this is the first time we heard the news of potential contract crystallization. The development for this second phase project is worth a close attention as it could offer strong job opportunities for MMHE as well as other Malaysian players. Based on the list of contenders we see the joint bid to have a very good chance for the contract though contract value is still unclear. We expect earnings contribution for MMHE to only flow in in FY13 should the contract is secured in 2H12.
Chiong Tong Chai 03-26918887 ext 175


28 May 2012


Petronas Carigali has reportedly commenced negotiation with MISC for a lease contract for its Angsi field’s vessel based chemical enhanced oil recovery project. Subsequent from this, the status for a formal tender for the project is unclear. Initially the contract was supposed to run for a fixed 5 year period. Total cost for the project is estimated at USD1bn and major contract components can be broken down into vessel, operation and maintenance and supply of chemicals. We reckon this latest development could be due to Petronas’ intention to meet its commencement target for the project which is by end of 2013. Should this development proved to be true, we reckon it will be a setback for the rest of the contenders, particularly for those who are eyeing for the vessel and operation and maintenance components. Previously, Bumi Armada, M3nergy, Kencana, MMC Oil & Gas Engineering and US based Water Standard were all reported to be interested in the vessel and operation and maintenance components. While Uzma on the supply of chemicals.

Our view. We remain sanguine on the sector and expect continuous positive newflows throughout 2012. OVERWEIGHT rating on the sector, maintain Buy on Bumi Armada (RM4.65), Dayang (RM2.43), Dialog (RM2.78) and Uzma (RM2.70), Trading Buy on Wah Seong (RM2.38) and Sell on MMHE (RM4.37).


28 May 2012
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 OUTPERFORM The stock is expected to perform ahead of the market in the next 12 months TRADING BUY The stock is expected to outperform the market in the next 3 months NEUTRAL The stock is expected to perform in line with the market in the next 12 months TRADING SELL The stock is expected to underperform the market in the next 3 months SELL An expected price depreciation of more than 10% in the next 12 months SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analyst’s coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analyst’s coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analyst’s 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.

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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 Head of Research