Bintulu Port contract a sign of ramp up in momentum
The issuance of a letter of acceptance by Bintulu Port Sdn Bhd (Bintulu Port) to China Harbour Engineering Company Ltd for the breakwater and associated works package at Samalaju Port was a sign of an increase in contracts momentum for the project’s remaining packages.
To note, Bintulu Port has issued a letter of acceptance to China Harbour Engineering Company Ltd for the breakwater and associated works Package for Phase 1 Works of the Samalaju Port Development.
The contract is worth RM306 million for a duration of 30 months.
“We are not surprised by the awards given that development works are ongoing at the Samalaju Port,” outlined a research analyst with Kenanga Investment Bank Bhd (Kenanga Research).
“However, we note that there has been no announcement on the terms and conditions of the Samalaju concession which will give more clarity on the prospects of the Samalaju port.”
Assuming the breakwater and associated works takes up 30 months, around RM10.2 million will be spent each month, estimated the research firm.
“This should be within our estimated capital expenditure (capex) of RM300 million for the calendar year 2013.”
Looking at the group’s outlook, Kenanga Research noted that the near-term focus would still be on Bintulu Port’s terms and conditions of the Samalaju concession agreement, which would come in after it finalises all its corporate exercises.
The catalysts for Bintulu Port’s earnings include a higher tariff for cargo handling when the Samalaju Industrial Port starts operation (the initial phase is expected by 2H13) and, higher LNG vessel calls and port services when the ninth liquefied natural gas (LNG) train for MLNG is completed by 2016.
“We maintain our forecasts pending the 2QFY13 earnings expected in August 13.”
In a separate report, AmResearch Sdn Bhd (AmResearch) noted that this latest contract brought the total value of jobs awarded at the Samalaju Port at closer to RM940 million in its estimates.
“TRC had last June, bagged the RM197 million interim port facilities,” AmResearch recapped. “Earlier in February 2012, Bintulu Port awarded the contract for capital dredging and reclamation works (Phase 1) to Integrated Marine Works Sdn Bhd for a contract sum of RM437 million.
“As such, we expect a step-up in contract momentum for the remaining packages of this project.”
This would include additional phases of the breakwater package; construction of four new wharves measuring 250 metres each; and port administrative and operation buildings, port equipment, a conveyor belt, access roads and other facilities.
With the total capex for the Samalaju Port estimated at around RM1.8 billion, AmResearch estimated the balance of works to be valued around RM800 million.
“The developments at Samalaju Port could be a precursor to a re-acceleration of long-overdue infrastructure works over in Sarawak – and in particular, the Sarawak Corridor for Renewable Energy,” anticipated AmResearch.