Thomas Huong The Star 29 Nov 11;
Benalec projects draw attention
PETALING JAYA: Marine engineering specialist Benalec Holdings Bhd's massive land reclamation projects in Johor have drawn much interest but there are still a lot of issues which are not clear, some analysts said.
The projects also seemed to have a striking resemblance to what Petroliam Nasional Bhd (Petronas) and oil and gas service provider Dialog Group Bhd were planning in Johor.
Benalec's land reclamation jobs, measuring 1,760 acres and 3,485 acres in Pengerang and Tanjung Piai respectively from the Johor government, are to develop petroleum and petrochemical hubs and maritime industrial parks.
Petronas has plans for a RM60bil integrated refinery and petrochemical complex, known as RAPID, which is expected to be commissioned by the end of 2016 while Dialog, together with Vopak Terminal Pengerang BV, are developing an independent deepwater petroleum terminal worth RM5bil.
When asked about Benalec's projects, Dialog executive chairman Ngau Boon Keat said it had taken Dialog three years to get to where it was in Pengerang.
Benalec declined to comment on reports by StarBiz which said that the group was eyeing a parcel at the south-west of Tanjung Piai which was said to be suitable to be a deepwater petroleum terminal facility, similar to what Dialog was developing in Pengerang.
Sources had also said that the land to be reclaimed in the south-east of Tanjung Piai might include a container port to serve Petronas's RAPID project.
However, in a filing with Bursa Malaysia on Nov 10, Benalec said the Johor projects had only received approvals in principle from the state's Economic Planning Unit (UPENJ).
The approvals in principle were valid for six months, and were still subjected to detailed analysis of the projects from UPENJ, a feasibility study and an environmental impact assessment report.
“The projects in Johor will commence upon the satisfaction of the above approvals. The period of the projects would be determined upon the signing of formal agreements,” said Benalec.
The approvals in principle were granted to Benalec's 70% owned sub-subsidiaries Spektrum Budi Sdn Bhd and Spektrum Kukuh Sdn Bhd.
Analysts were told at a briefing that the projected gross development value (GDV) in Pengerang was RM3mil per acre while for Tanjung Piai, RM4mil per acre.
Development works in Pengerang would take 10 years while Tanjung Piai, 10 to 15 years.
According to AmResearch, this will make Benalec into one of the largest holders of prime seafront land earmarked for oil and gas activities within south Johor.
AmResearch said the Johor developments worked out to a combined GDV of about RM15bil over 10 to 15 years, based on a net saleable area of 75%.
Given its integrated approach, Benalec is targeting gross margins of 40%.
“Benalec is confident that Tanjung Piai, with its strategic location and natural depth of 20m, would be suitably positioned to complement the vibrant Jurong petrochemical hub in Singapore which is facing capacity constraints.”
AmResearch said three out of five major off-takers approached by Benalec concerning the Tanjung Piai projects had expressed their interest, and were looking at securing no less than 100 acres each.
Meanwhile, Kenanga Research said Benalec's management opted to execute the reclamation works based on by-demand and was likely to require upfront payments.
“Based on an 80:20 debt to equity structure, we expect Benalec to gear up to RM200mil per annum for project financing,” said Kenanga Research.
The research house also noted that Benalec seemed to be taking a different approach in Johor compared with its Malacca projects.
“For the Malacca land development, the reclamation works will take place before buyers are identified.”
Benalec is the largest “land manufacturer” in Malacca with an entitlement of some 1,360 acres.
AmResearch said Benalec has an outstanding landbank of about 800 acres in Malacca, which could potentially fetch a GDV of RM1.2bil based on a previous transacted price of RM28 per sq ft.
It is interesting to note that on Nov 24, Benalec directors Leaw Seng Hai, Datuk Leaw Tua Choon and Leaw Ah Chye sold a 7.95% stake in the group for RM76.56mil in dealings during closed period.
On Nov 22, Benalec's board had fixed an issue price of RM1.32 per placement share for the first and final tranche of a private placement, comprising 72,960,000 placement shares.
The private placement was to acquire funds for the the group's land reclamation projects.
Benalec, which was listed on Jan 17 this year on the Main Market of Bursa Malaysia, provides marine construction services (land reclamation, dredging) and vessel chartering.
At the time of its initial public offering (IPO), it had an estimated 17.9% market share in Malaysia, based on construction projects secured between 2006 and 2009.
Benalec's IPO entailed a public issue of 100 million new ordinary shares of 25 sen each at an issue price of RM1 each per share.
Benalec's market capitalisation stood at RM978.2mil, based on its closing price last Friday of RM1.34 per share.
For the financial year ended June 30 (FY11), it posted a net profit of RM96.08mil and revenue of RM214.49mil.
