17 January 2011

Big reclamation project coming up on the East Coast?

A "big one" (reclamation project) is coming up on the east coast of Singapore, says Benalec Holdings Bhd which expects the Singapore reclamation business to be a "big contributor to the group in the next two to three years".

Benalec eyes Singapore jobs
The Star 17 Jan 11;
KUALA LUMPUR: Newly listed Benalec Holdings Bhd expects business from Singapore to be a big contributor to the group in the next two to three years as it eyes more reclamation projects there.

“There are quite a handful projects in Singapore, such as land reclamation at Tuas's View Extension and Pulau Tekong in Changi. There's also a big one (project) coming up on the east coast of Singapore,” said managing director Vincent Leaw after Benalec's listing ceremony this morning.

Leaw said he expected “quite a number of land reclamation projects” to be called by the Singapore government soon.

“Singapore is going to be one of the big contributors to the group,” he said, adding that Benalec had secured a sand supply and delivery project for land reclamation in Tuas View via its sister company, Oceanlec Pte Ltd.

The company opened at RM1.36 sen, with a 36 sen premium over its offer price.

Benalec opens 36% higher on trading debut
Prospects are bright for marine construction firm

Pauline Ng Business Times 18 Jan 11;
INTEGRATED marine construction company Benalec Holdings made an impressive debut on the Malaysian stock exchange yesterday. It opened 36 per cent higher over its offer price of RM1.00 as investors rate its prospects to be bright given the growing number of marine and reclamation projects in the region.

Although the bulk of its orderbook is mainly in Malaysia, Singapore will feature more prominently in the company's plans in the future as Benalec is eyeing a number of land reclamation projects in Singapore. It expects the market to be a larger contributor to earnings over the next two to three years.

'There are a handful of projects in Singapore, such as land reclamation at Tuas' View extension and Pulau Tekong in Changi. There's also a big one coming up on the east coast of Singapore,' said managing director Vincent Leaw after the company's listing ceremony.

He said the company is applying for a licence to enable it to bid for land reclamation projects in Singapore. It had secured a $250 million contract from the Singapore government in 2008, via its associate Oceanlec, to supply sand from Vietnam and Cambodia for the Tuas View reclamation.

Its projects include the construction of a marina at Puteri Harbour in Nusajaya Johor and it currently has an unbilled order book of some RM665 million (S$280 million) that will last another five to six years.

Benalec holds 18 per cent of the market share in marine construction work, and in the run-up to its initial public offering, analysts had pointed out that its fleet of 91 vessels gives the company a significant advantage in terms of costs and project completion time.

Having raised some RM100 million from its IPO, it is likely to use a part of it to acquire more tugboats and barges as it plans to tender for bigger projects in the coming years.

Controlled by the Leaw family which owns 68.5 per cent of the company, Benalec began to make in-roads in the sector after thinking out-of-the-box on a coastal protection project in Bagan Datoh, Perak in 1993.

'Back then, the group made a move to switch from using land-based equipment to transport sand and amour rock to utilising a tug-and-barge method which resulted in substantial savings in project time and cost,' Alliance Research observed.

Moreover, its business model is enticing in that land reclamation contract settlements are done by cash or in exchange for land, or a combination of both. This had allowed the company to accumulate landbank, and it now owns some 238 acres valued at nearly RM200 million.

Alliance had pegged Benalec's fair value at RM1.26 based on 10 times FY11 earnings per share of 12.6 sen while Maybank Research, which had an orderbook assumption win of RM650 million over the next 18 months, put it closer to RM2.00.

'Domestic players in land reclamation are few. Industry barriers include major capital outlay and skilled manpower. Prospects are positive as reclamation and shoreline protection works will continue in Melaka, Penang, Nusajaya and the other eastern Peninsular states. Singapore and the regional market also offer significant opportunities.'

Benalec was yesterday's second most traded stock, and it closed at RM1.34.

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