 |
|||||
 |
 |
 |
 |
|
 |
|
|
||||||||||||
 |
|||||||
 |
|
||||||
 |
|||||||
| News Coverage Ramunia back on project track after loss of Petronas contract The contract which was awarded early this year to Ramunia’s unit Ramunia International Services Ltd was for the engineering, procurement and construction of four platforms in an area jointly developed by Thailand and Malaysia off the Kelantan coast. According to Ramunia’s announcements to Bursa Malaysia, the loss of the contract came about as the two parties could not come to an agreement on additional costs. Since then the contract has been awarded to competitor Oilcorp Bhd’s unit Oilfab Sdn Bhd. As a result, Ramunia’s stock shed as much as 17% or 17 sen since early this month amid selling pressure, which stemmed from the company losing the contract. An analyst from a local brokerage that covers the oil and gas sector says the sell down on Ramunia is understandable as the contract was the largest it had bagged to date. Certain quarters say that Ramunia relinquishing the contract with Petronas and seeking an injunction to prevent the re-opening of tender of the contract may adversely impact its ties with Petronas and may affect future bids with the oil major “It is a big blow to the company of course. It was their largest job, and jobs of this size don’t come along everyday, and it's understandable if it adversely impacted the perception on Ramunia with shareholders. The question is: Will Ramunia be denied future jobs from Petronas?” the analyst from the local bank backed brokerage asks. The fears are real because as at end-March this year, Petronas contracts accounted for as much as RM402mil or about RM40% of Ramunia’s RM960mil order book. Since then, however, Ramunia has bagged a RM60mil contract from Talisman Malaysia Ltd, nudging its order book over the RM1bil mark. However, some market watchers suggest that Petronas, being a large corporation on the Fotune 500 list, will be unlikely to take into account Ramunia’s attempt at the injunction when dishing out future contracts. In a research report, Aseambankers cut Ramunia’s earnings forecast by 8% to 10% respectively from the FY08 and FY09 forecast results, largely due to the loss of the contract, which slashed the company’s order book by about 23%. However, the research outfit still views Ramunia favourably. New contracts in the pipeline In a quick phone conversation with BizWeek, Ramunia chairman Datuk Azizul Rahman Abdul Samad said the relinquishing of the contract was not very significant to the company still, because there were a large number of jobs available. “We still have a lot of orders coming in so we should be able to replenish it (the RM308mil contract which was awarded to Oilcorp) in a matter of months,” he said, without elaborating further. Azizul also dismissed talk of the company having problems with some of the other clients, suggesting that all the issues faced were only part and parcel of business. There has been much speculation in the market that Ramunia and one of its larger clients have been at loggerheads recently. Among Ramunia’s larger clients are Newfield Peninsula Malaysia Inc, Talisman Malaysia and Petronas. An analyst from Aseambankers says: “The loss of this project is disheartening to Ramunia on both operational and financial terms. However, on the flip side, with the regional yards facing tight capacity, we remain cautiously optimistic over Ramunia’s chances of securing several overseas projects, which are expected to be announced by year-end.” He adds: “Ramunia could also be moving down the value chain, and if all works out well the company could go into building rigs and FPSO’s (floating production, storage and offloading vessels). The company is also pushing hard and bidding for projects abroad – these are big jobs,” he says. The company has made several announcements to Bursa Malaysia, some on forming joint ventures with companies to bid for jobs abroad. Most significant is an announcement made end-June this year where the company said it was forming a joint venture with an Indian company Punj Lloyd Ltd to bid for projects under the Mumbai High North Development project, which is under the purview of the state controlled company Natural Gas Corp Ltd of India. Other contracts which the company has bid for and may stand a good chance of bagging include a RM2bil contract for the building of fixed platform structures for the Woodside liquefied natural gas project and a RM500mil contract for the construction of process modules for a FPSO vessel from a Norwegian company. Strong demand for fabrication services Nevertheless Aseambankers still maintains its buy call on the company, with a target price of RM1.60, which is a 39% premium to its close on Thursday of RM1.15. Aseambankers forecasts Ramunia raking in as much as RM44.7mil for the current financial year ending October on the back of RM793mil in sales, which is a 171% and 128% jump respectively from a year ago. For the six months ended April, Ramunia posted a net profit of RM12.8mil on the back of RM231.2mil in sales, which is a gain of about 103% and 174% respectively from a year ago. In its notes accompanying its financials, Ramunia merely says its better results were due to improved performance from its oil and gas division. Much of the positive sentiment surrounding Ramunia stems from the need for fabrication services, by exploration and production companies which have increased drilling activities and the search for new energy sources, with the price of oil burgeoning. With demand escalating, Ramunia which has a 180-acre yard which can handle as much as RM5bil worth of work and can handle the construction of two semi-submersibles, two jack up rigs and fabrication works valued at about RM800mil all simultaneously. The company has also set aside some RM350mil to acquire additional yard space and acquire additional machinery, which should take place sometime next year. With most Asian fabrication yards running at full capacity, this expansion should augur well for Ramunia.
|
 |
 |
 |
