News The
company announced yesterday that it had issued a Letter of Acceptance (LOA) to
a subsidiary of TRC Synergy Bhd for the Interim Port Facility Package of Samalaju
Port.
Contract sum is
RM194m and duration of the contract is 9-12 months for two sections.
Comments We are
not surprised by the awards as we understand that the interim injunctions
against BIPORT (by Integrated Marine Works Sdn Bhd (IMW) had been set aside by
the KL High Court and Bintulu High Court respectively in May, leaving the
company free to receive, open and evaluate the tender although there has been a
slight delay in the tendering process due to the above court cases.
The company has a
cash pile of RM294.8m (as at Mar-2012). Hence, we believe that in the interim, the
company will have no issues funding this portion of the project in the short
term. To recap,BIPORT has a grant worth RM500m from the federal government for
the construction of Samalaju Port.
We also understand
that the management has received an undertaking consent from the state government
to finalise the concession agreement in the near term. We expect the finalised
financingstructure to follow suit thereafter, which is likely to be geared
under its subsidiary, Samalaju Industrial Port Sdn Bhd.
Outlook Catalysts for Biport’s earnings are 1) Higher
tariff for cargo handling in Samalaju Industrial Port when it is completed by
2H13 and 2) higher LNG vessel calls and port’s services when the ninth LNG train
for MLNG is completed by 2016.
Forecast Maintain earnings estimates for now until the company
announces new concession and financing structure, which will enable us to fully
assess theimpact on BIPORT.
Rating MAINTAIN MARKET PERFORM
Valuation Target Price of RM7.20 based on DCF derived valuation
(WACC: 9.6%).
Risks 1)
Lower-than-expected port and bulking division activity 2) Extensive capex for
the Samalaju port that will eat into company’s cashflow position.
Source: Kenanga
No comments:
Post a Comment