AmWatch - Benalec : Signs power MoU with Pestech Buy, 15 Apr 2015

STOCK FOCUS OF THE DAY

Benalec : Signs power MoU with Pestech            Buy

We maintain our BUY recommendation on Benalec Holdings with an unchanged fair value of RM1.25/share. This pegs the stock at a 45% discount to its SOP value.

Benalec announced on Bursa Malaysia yesterday evening that it has signed an MoU with Pestech International for the supply of power infrastructure. Benalec's wholly-owned unit, Tg. Piai Maritime Industries Sdn Bhd, had signed the MoU with Pestech Sdn Bhd (PSB) for exclusive exploratory efforts to establish power supply infrastructure at the Tg. Piai Integrated Petroleum and Maritime Industrial Park (TPIPMIP). Both parties will begin discussions to form a definitive contract within six months from the signing of the MoU.

Under the MoU, PSB will be entrusted to design the electrical infrastructure for TPIPMIP. Subsequently, it will carry out the design, manufacturing, testing, delivery of equipment & installation, construction as well as commissioning of the required infrastructure on a turnkey basis. The terms and conditions of the resulting project contract will be determined later.

We foresee this latest move as a measure of Benalec's commitment to develop its 3,485-acre Tg. Piai concession into a future oil storage hub via TPIPMIP. Apart from power, we expect the group to be in the midst of planning for other infrastructure requirements within the industrial park. This comes as the group had earlier submitted plans to raise RM200mil via convertible bonds.

We expect initial works of between 100 acres to 200 acres at Tg. Piai to commence within the next few months. All in, we believe the increased level of activities will improve the visibility of TPIPMIP when attracting major international oil storage players. However, as always, the real challenge will be finding trailblazing offtakers. Negotiations with 1MY Strategic Oil Terminal is expected to be concluded by 11 June.

Others :

Bumi Armada : Secures contract to provide FSU Buy

RHB Capital : Main differences between current RHB Cap and new RHB Bank entity 

                Hold

Economic update : Monetary Authority of Singapore maintains policy stance of a modest and gradual appreciation of SGD

NEWS HIGHLIGHTS

Tenaga Nasional : TNB’s latest power plant in Manjung starts operations

Public Bank : RAM Ratings reaffirms Public Bank’s AAA ratings

Gamuda : Gamuda Walk officially opens its doors

DISCLAIMER:

The information and opinions in this report were prepared by AmResearch Sdn Bhd. The investments discussed or recommended in this report may 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 AmResearch Sdn Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmInvestment 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 judgement as of this date and are subject to change without notice.