Benalec Holdings Bhd
(Dec 9, RM1.34)
Maintain buy with fair value RM2.85: Maintain “buy” on Benalec with an unchanged sum-of-parts-based fair value of RM2.85 per share. Benalec has signed an MoU with Rotary Engineering Ltd to co-develop an integrated petroleum storage facility for storing, blending and distributing crude oil and its derivatives on 101ha of reclaimed land at Tanjung Piai, southwest Johor.
With an initial capacity of one million cu m, the storage facility is scalable up to three million cu m and comes with jetties capable of handling very large crude carriers (VLCC).
Both parties will jointly construct and develop the first independent deepwater storage terminal for oil products at Tanjung Piai. Benalec will undertake the land reclamation, with Rotary handling the design, construction and maintenance of the terminal.
Singapore-based Rotary is the region’s largest engineering procurement, construction and maintenance (EPCM) provider for the oil and gas (O&G)/petrochemical industry in the region, having built almost half of the independent storage tanks in Jurong.
We are increasingly upbeat with Benalec’s astute landbanking moves, and the speed at which they are being executed. The Rotary deal comes just under one month after the group had secured development rights in principle to 2,123ha of prime seafront land in south Johor.his trailblazer deal validates our earlier conviction of Tanjung Piai’s strategic
positioning in complementing the vibrant Jurong petrochemical hub with its excellent location within the busy Straits of Malacca and close proximity to Singapore.
Most importantly, Benalec is in a sweet spot to monetise the deep development potential of its Tanjung Piai landbank with the solid backing of Rotary. The JV will be at the forefront to exclusively promote Tanjung Piai as an O&G/petrochemicals hub within Asia, notably in Malaysia and Singapore.
Benalec is set to gain from multiple new earnings streams via marine-related works and associated recurring income from the ownership of this proposed oil terminal.
By extension, this implies more upside to our fair value, whereby we have only assumed land sales of about 121ha each for FY13F/FY14F.
We continue to highlight Benalec as a cheaper but early stage play on the repositioning of south Johor as a rising O&G hub (fully diluted FY12F to FY14F price earnings ratio (PER) five to 10 times against earnings per share compound annual growth rate of 27%). The crystallisation of more landbanking deals in Tanjung Piai following this maiden oil terminal project would help prod a further PER re-rating, we believe. — AmResearch, Dec 9
(Dec 9, RM1.34)
Maintain buy with fair value RM2.85: Maintain “buy” on Benalec with an unchanged sum-of-parts-based fair value of RM2.85 per share. Benalec has signed an MoU with Rotary Engineering Ltd to co-develop an integrated petroleum storage facility for storing, blending and distributing crude oil and its derivatives on 101ha of reclaimed land at Tanjung Piai, southwest Johor.
With an initial capacity of one million cu m, the storage facility is scalable up to three million cu m and comes with jetties capable of handling very large crude carriers (VLCC).
Both parties will jointly construct and develop the first independent deepwater storage terminal for oil products at Tanjung Piai. Benalec will undertake the land reclamation, with Rotary handling the design, construction and maintenance of the terminal.
Singapore-based Rotary is the region’s largest engineering procurement, construction and maintenance (EPCM) provider for the oil and gas (O&G)/petrochemical industry in the region, having built almost half of the independent storage tanks in Jurong.
We are increasingly upbeat with Benalec’s astute landbanking moves, and the speed at which they are being executed. The Rotary deal comes just under one month after the group had secured development rights in principle to 2,123ha of prime seafront land in south Johor.his trailblazer deal validates our earlier conviction of Tanjung Piai’s strategic
positioning in complementing the vibrant Jurong petrochemical hub with its excellent location within the busy Straits of Malacca and close proximity to Singapore.
Most importantly, Benalec is in a sweet spot to monetise the deep development potential of its Tanjung Piai landbank with the solid backing of Rotary. The JV will be at the forefront to exclusively promote Tanjung Piai as an O&G/petrochemicals hub within Asia, notably in Malaysia and Singapore.
Benalec is set to gain from multiple new earnings streams via marine-related works and associated recurring income from the ownership of this proposed oil terminal.
By extension, this implies more upside to our fair value, whereby we have only assumed land sales of about 121ha each for FY13F/FY14F.
We continue to highlight Benalec as a cheaper but early stage play on the repositioning of south Johor as a rising O&G hub (fully diluted FY12F to FY14F price earnings ratio (PER) five to 10 times against earnings per share compound annual growth rate of 27%). The crystallisation of more landbanking deals in Tanjung Piai following this maiden oil terminal project would help prod a further PER re-rating, we believe. — AmResearch, Dec 9
