Thursday, November 20, 2014

Muhibbah ... Tender For RAPID Subcontract Remain Intact !!

The firm was not named as the builder for Petroliam Nasional Bhd's (Petronas) planned RM2.7 billion regasification facilities. The fact that MEB did not benefit from the award of the regassification plant in Pengerang, Johor should not be a major concern as the group did not tender for the job. The Pengerang project and the Refinery and Petrochemical Integrated Development (Rapid), which is also located in Pengerang, are two different tender areas.

The drop in Muhibbah's share price was due to "confusion" over the winning party for the regasification facilities contract given out by Petronas. It did not go to Muhibbah, but they did not mention that they were bidding to begin with. They are concentrating on other parts of Pengerang, Johor – the construction of refinery and petrochemical facilities instead.

Sources also say the drop might also be due to a “prominent” fund management company selling its stake across its O&G holdings.

On 14 Nov 2014 Dialog Group Bhd had signed a shareholders’ agreement with Petronas Gas Bhd to undertake the regasification project. The project comprises a a regasification unit and two liquefied natural gas storage tanks.

Management clarified that the group’s tenders in Rapid for more than one refinery subcontract works remain intact. Expect it to land a contract in the short term, worth up to RM500mil. Muhibbah could be in the running for up to about RM1bil worth of projects in Rapid.

MEB is involved in the downstream side of the oil and gas sector, providing infrastructure jobs.

MEB currently boost an orderbook of RM2.3bil of which RM875mil are from construction, RM1.2bil from crane and RM257 from shipyard division

With Petronas license and marine based expertise, it is poised to clinch a sizeable share of contracts at RAPID. Out of the five RAPID packages, it appears to be the strongest contender for civil and fabrication works for Package 3 which was awarded to Techniques Rrunidas SA to build a refinery and steam cracker plant.

Muhibbah is also in the running for three other packages. Assuming a rm500 million win, this would lift its current infra order book to rm1.4 billion. This does not yet include the deepwater jetty worth rm1 billion.

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