Benalec Holdings Bhd (Dec 1, RM1.36)
Mantain buy at RM1.35 with fair value of RM2.85: Maintain “buy” on Benalec Holdings with an unchanged sum-of-parts-derived fair value of RM2.85. Reuters recently reported that at least three loaded oil storage supertankers have been allowed to remain anchored in southern Malaysian waters.
This came three months after the government ordered the eviction of seven converted very large crude carriers (VLCCs) off Pasir Gudang in August. These vessels held a combined capacity of 1.9 million tonnes of crude/fuel oil.
Two vessels have since secured licences to stay in the area — the One Emerald leased by Mercuria and Nasa Unity (jointly utilised by Thailand’s PTT and Azerbaijan’s Socar). A third vessel, the Front Queen, chartered by Arcadia was also issued a similar permit although it was not one of the original seven VLCCs asked to leave the area.
Three of the original seven VLCCs have since moved to a new home. The Brilliant Jewel (housing Vitol’s fuel oil) has moved to the Port of Tanjung Pelepas.
The other two, Mayfair and Titan Venus, chartered by ConocoPhillips and Trafigura respectively, have moved to Linggi on the southwest coast of Peninsular Malaysia near Port Dickson.
This latest news strengthens our view of the immense development potential of Benalec’s Johor landbank as a future oil hub for landed storage, specifically for its Tanjung Piai landbank (3,485 acres). While the three VLCCs mentioned earlier have been granted an extended stay in Johor, they will eventually have to find a new permanent base, we believe.
Most of the VLCCs squatting near Johor are incumbents within the overcrowded Jurong petrochemical hub. To be sure, we gather that ConocoPhillips may not be ending its Mayfair lease soon.
The quit notice issued by the Malaysian government is to improve access along the shallow waterways of south Johor, possibly to accommodate Petroliam Nasional Bhd’s RM60 billion refinery and petrochemicals integrated development project.
New IMO requirements that require the gradual phasing out of single-hull vessels may somewhat curb demand for floating storage. The location of these fuel-carrying vessels is also farther away from the main bunker markets.
Singapore traders looking for more alternative storage space may still favour Johor over Indonesia’s Karimun island as reports indicate that cargo owners would have to pay 30% to 35% more for operational logistics. — AmResearch, Dec 1
This article appeared in The Edge Financial Daily, December 2, 2011.
Mantain buy at RM1.35 with fair value of RM2.85: Maintain “buy” on Benalec Holdings with an unchanged sum-of-parts-derived fair value of RM2.85. Reuters recently reported that at least three loaded oil storage supertankers have been allowed to remain anchored in southern Malaysian waters.
This came three months after the government ordered the eviction of seven converted very large crude carriers (VLCCs) off Pasir Gudang in August. These vessels held a combined capacity of 1.9 million tonnes of crude/fuel oil.
Two vessels have since secured licences to stay in the area — the One Emerald leased by Mercuria and Nasa Unity (jointly utilised by Thailand’s PTT and Azerbaijan’s Socar). A third vessel, the Front Queen, chartered by Arcadia was also issued a similar permit although it was not one of the original seven VLCCs asked to leave the area.
Three of the original seven VLCCs have since moved to a new home. The Brilliant Jewel (housing Vitol’s fuel oil) has moved to the Port of Tanjung Pelepas.
The other two, Mayfair and Titan Venus, chartered by ConocoPhillips and Trafigura respectively, have moved to Linggi on the southwest coast of Peninsular Malaysia near Port Dickson.
This latest news strengthens our view of the immense development potential of Benalec’s Johor landbank as a future oil hub for landed storage, specifically for its Tanjung Piai landbank (3,485 acres). While the three VLCCs mentioned earlier have been granted an extended stay in Johor, they will eventually have to find a new permanent base, we believe.
Most of the VLCCs squatting near Johor are incumbents within the overcrowded Jurong petrochemical hub. To be sure, we gather that ConocoPhillips may not be ending its Mayfair lease soon.
The quit notice issued by the Malaysian government is to improve access along the shallow waterways of south Johor, possibly to accommodate Petroliam Nasional Bhd’s RM60 billion refinery and petrochemicals integrated development project.
New IMO requirements that require the gradual phasing out of single-hull vessels may somewhat curb demand for floating storage. The location of these fuel-carrying vessels is also farther away from the main bunker markets.
Singapore traders looking for more alternative storage space may still favour Johor over Indonesia’s Karimun island as reports indicate that cargo owners would have to pay 30% to 35% more for operational logistics. — AmResearch, Dec 1
This article appeared in The Edge Financial Daily, December 2, 2011.
