(unchanged) FPSO Market Lively and Vibrant...FPSO Market – Lively and Vibrant Pulsating with...

SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS

17 October 2011

PP16832/01/2012 (029059)

Sector Update 21 June 2012

PP16832/01/2013 (031128)

of 2

Malaysia

Oil & Gas FPSO Market – Lively and Vibrant

Pulsating with opportunities. We foresee a strong push for new and

rewarding FPSO contracts over the next five years, at a rate of 15-20

new orders p.a.. We see a greater preference for small- to mid-sized

leased converted FPSOs, with demand from the Asia-Pacific and Latin

American regions. Bumi Armada, Perisai, Yinson and SapuraKencana

are our picks to play the burgeoning demand for FPSOs.

Positive outlook on the FPSO space. FPSO utilisation is high, and

idle units are scant. Orders are on the rise as the number of projects

requiring FPSO solutions pick up. These positive indicators reflect

stronger global E&P spending as the search for hydrocarbon resources

continues, sustained by robust oil prices and energy security needs.

Good push for new and rewarding contracts. Out of 200-250

projects earmarked for FPSO solutions over the next five years

(average: 40-50 units p.a.), 100-140 firm projects will likely come

onstream (average: 20-28 units p.a.). We project 15 new FPSO orders

annually over 2012-14. Demand will likely come from Asia Pacific and

Latin America. Small - to mid-sized leased FPSOs (below 150,000bpd

capacity) which were converted will be the preferred asset class as

development moves into: (i) shallow water, (ii) marginal and (iii)

matured fields requiring rejuvenation works and (iv) fast-track projects.

Strategic partnerships, track record and balance sheet to fuel

growth. Leased operators with: (i) proven execution capabilities and

engineering skill sets, (ii) balance sheet strength and (iii) boosted by the

backing of a strategic partnership at the shipyard or oilfield operator

level, will benefit most from the growing demand for new FPSOs. The

returns from these FPSO charters are commendable, with project IRRs

averaging 10-12%, anchored by long term contracts.

FPSO stock picks. We see numerous opportunities for Bumi Armada

to capitalise on the potential FPSO projects worldwide as it aims to be a

top 4 player by 2013-14. It is currently tendering for 5-6 projects (i.e.

Kraken, Madura, C7, Kamelia, Belud) and has the capacity to take up

2-3 new projects p.a.. We do not rule the prospect of Perisai entering

the Malaysia-based FPSO market with Emas Offshore as its potential

strategic partner. Yinson and SapuraKencana are the most recent

entrants into the FPSO market. The former, in partnership with PTSC,

secured a 7+3-year USD737m contract for the Lam Son project in

Vietnam. The latter owns a 50% stake in FPSO Berantai for the field

project, which will be deployed for production by 2H12.

Summary of companies (calendarised)

Company Rec Price TP EPS (sen) EPS Grth (%) PE (x) DPS (sen) Yield (%) (RM) (RM) 12F 13F 12F 13F 12F 13F 12F 13F 12F 13F

Bumi Armada

Buy 4.09 4.88 18.2 21.4 37.5 17.8 22.4 19.0 0.0 0.0 0.0 0.0

Perisai

Buy 0.895 1.20 10.7 10.8 278.2 1.4 8.4 8.3 0.0 0.0 0.0 0.0

SapuraKencana

Buy 2.25 2.68 12.0 13.3 44.2 10.8 18.6 16.8 0.0 0.0 0.0 0.0

Yinson

Buy 2.15 2.54 17.3 23.5 (50.1) 36.0 12.3 9.0 2.5 2.5 1.2 1.2

Sources: Maybank-IB, Bloomberg

Overweight (unchanged)

Wong Chew Hann [email protected] (603) 2297 8688 Chong Ooi Ming [email protected] (603) 2297 8676

21 June 2012 of 26

Oil & Gas - FPSO 17 October 2011

Fundamental outlook and prospects

Energising and rewarding. We see exciting prospects in the floating,

production, storage and offloading (FPSO) market, with our positive

outlook underpinned by enlivening macro and micro fundamental

indicators. The steadying oil price environment {Brent crude

>USD70/bbl, <USD120/bbl}: (i) supports sustained E&P spending and

(ii) aids higher project sanctions.

Gaining momentum as the preferred solution. As field development

moves towards remote, marginal and deepwater prospects, FPSO

vessels are also the preferred solution vis-à-vis other asset options (i.e.

fixed platforms, SPAR) as it compares favourably on economic (i.e.

financial costs), engineering (i.e. design, delivery time-span) and

geological (i.e. water depth, field reserves) aspects. This is reflected in

the increasing number of FPSOs entering the market, from 67 units in

2001 to 158 in 2011, equating to a modest 10-year CAGR of 9%.

O&G: Projected break-even hurdle costs O&G: Production cost and type of field development

250

200

150

100

50

20351980

Current hurdle

rate~ USD55

1995 2008 2020

History Projections

High price

Low price

base price

Production Cost (USD/ bbl)

0

20

40

60

80

100

0 1,000 2,000 3000, 4,000 5,000 6,000 7,000 80,00 9,000

EOR

Oil

Shale

Prod‟

ucedMiddle

East

Gas to

Liquids

Heavy

Oil

Production Cost (USD/ bbl)

b’ boe

Deepwater & Ultra Deepwater

OtherConventional

Arctic

Sources: IEA, Maybank-IB Sources: Infield Systems Limited, Maybank-IB

Trend of FPSOs in service or available FPSO fleet utilization rate and idle units

17 20 21 23 27 29 3343 48

62 67 6379 83 90

104108

117139

144

146

148152

2 1 1 1 1 2 33

5

53 4

6

67 1 3

5

5

11 9 11 7

10

40

70

100

130

160

190

90 92 94 96 98 00 02 04 06 08 10 12 YTD

Units in service (LHS) Idle units (LHS)(FPSO units)

2

1 1 1 1

2

3 3

5 5

3

4

6 6

7

1

3

5 5

11

9

11

7

88

90

92

94

96

98

100

0

2

4

6

8

10

12

90 92 94 96 98 00 02 04 06 08 10 12 YTD

Idle units (LHS) Utilisation rate (RHS)(FPSO units)

Average utilisation rate: 94%

(%)

Sources: International Maritime Associates, Upstream, Maybank-IB Sources: International Maritime Associates, Upstream, Maybank-IB

21 June 2012 of 26


43 FPSO contracts were awarded in 2009-2011 (averaging 14 units

p.a.). Order momentum has picked up in tandem with the recovery in

E&P spending. Of these awards, we observed the following trends:

(i) FPSO conversions were the preferred construction

method, largely due to its faster delivery period (averaging 18-

24 months), the availability and affordability of tankers (due to a

global oversupply) and cost economics (i.e. tailored to fit a

field‟s reserve requirements). 20 units of FPSO ordered were

conversions, followed by newbuilds (13) and redeployments (10

units).

(ii) Orders were largely for small- to mid-sized FPSOs. 65%, or

28 units of the FPSOs ordered were small (15 units) and

medium (13 units) sized units, with production capacity ranging

up to 80,000 and 150,000 bpd. 15 units were large-sized FPSO

orders, catering mainly to Petrobras‟ projects in Brazil.

(iii) Brazil was the single largest market for FPSOs, making up

30% of the orders. The FPSOs were to cater for Petrobras‟ field

development projects, notably the deepwater and pre-salt

fields. Petrobras ordered 8 FPSOs for its pre-salt fields in 2010.

The Asia-Pacific region accounted for 11 of the orders –

Australia (3), Malaysia (2), Indonesia (2), Vietnam (2), China

and India (1 each), largely deployed for shallow and marginal

field projects.

(iv) FPSO charters were largely leased contracts. Leased

contracts made up 22 of the 43 FPSO orders in 2009-11,

accounting for 51% of the market. The lessors were SBM (5

units), Bumi Armada (3), Teekay (3), BW Offshore (2),

Bluewater (2), Modec (2), EOC (1), Saipem (1), Sevan (1),

Berlian Laju Tanker (1) and Petrofac-SapuraKencana (1).

Snapshot of FPSO contract characteristics

FPSO contract awards

Newbuilds

Normally owned

USD 0.8–2b capex

3-4 years construct

-ion

Conversions

Normally leased

USD250-800m capex

2-3 years construct

-ion

Redeployments

Normally leased

At least USD5mcapex

3-12 months upgrade

Source: IHS

Global E&P spending

-5

10

25

40

55

70

85

100

200

350

500

650

2005 2006 2007 2008 2009 2010 2011 2012F

Global E&P Spend (LHS) WTI Crude (RHS)(USD b) (USD/barrel)

Sources: Barclays Capital, Maybank-IB

21 June 2012 of 26


(v) New players entering the FPSO market. OSX (Brazil) and

SapuraKencana (Malaysia) were among the new players

joining the FPSO charter markets (with contracts in hand). The

emergence of these newcomers coincided with the requirement

for local content/ownerships/shipyard owners, and the opening

up of field development to domestic oil & gas service providers.

These players are backed by their respective national oil

companies (NOCs) i.e. Petrobras and PETRONAS.

** Yinson is the latest to join the FPSO market following its

partnership with PTSC (Vietnam) for the Lam Son project.

(vi) Consolidation in the FPSO market. These new entrants were

offset by consolidation within the sector.

FPSOcean filed for bankruptcy in 2009 despite the sale of

its partially completed FPSO to Ramunia.

Petroprod sold its under-construction FPSO in 2009 to

SembCorp‟s Jurong Shipyard; the vessel was finally taken

up by Teekay.

Oceaneering exited the industry in 2010, having sold its

ageing FPSO for scrap, to refocus on its core diving

support business.

BW Offshore acquired Prosafe Production in 2010, which

comprised 8 FPSOs, 2 FSOs and one tanker.

Teekay acquired Sevan‟s 3 FPSOs in 2011, which were on-

contract, and also the option to buy 2 speculative newbuild-

hulls located in China

(vii) Costs escalate, contracts are longer. On average,

the conversion cost of a FPSO has gradually stepped up,

from USD720m per unit in 2009 to USD755m in 2010 and

USD770m in 2011;

while FPSO contracts tenures (measured on the firm

portion of the contract) enjoyed longer duration, from 12

years in 2009 to 15 years in 2010 and 16 years for 2011;

project IRRs averaged around 10%, and project financing

hovered around a 70:30-80:20 debt:equity ratio, depending

on the balance sheet strength of the respective firms and

the availability of corporate guarantees from oil majors.

The gradual increase in FPSO conversion cost….. ….is supported by lengthening (firm) tenures

717.8

755.0

777.2

700

720

740

760

780

2009 2010 2011

Average capex per vessel (USD m)

12

15

16

10

12

14

16

18

2009 2010 2011

Average no of years for firm contract tenure(years)

Sources: International Maritime Associates, Upstream, Maybank-IB

Sources: International Maritime Associates, Upstream, Maybank-IB

21 June 2012 of 26

Oil & Gas - FPSO

Sources: International Maritime Associates Inc, Upstream, Maybank-IB *a single order comprising 8 hulls

FPSO contracts awarded YTD from 2009

Award date

Company Field Water

depth (m) Oil Company Country Ownership Construction type Shipyard

Contract terms (Charter years or EPC)

2009 SBM Offshore Aseng 1,000 Nobel Guinea Leased Conversion Keppel 15 yrs + 5 yrs

2009 BWO Papa-Terra 1,200 Petrobras Brazil Owned Conversion Cosco Dalian EPC

2009 EOC Chim Sao 95 Premier Oil Vietnam Leased Conversion Keppel 6yrs + 6yrs

2009 Bumi Armada TGT 43 Hoang Long Vietnam Leased Conversion Keppel 7yrs + 8 yrs

2009 Saipem Aquila 815 ENI Italy Leased Conversion Dubai DryDocks 20yrs

2009 Bluewater Nan Hai 115 CNOOC China Leased Redeployment Batam 1yr -1.5 yrs

2009 SBM Offshore Baleia Azul 1,200 Petrobras Brazil Leased Redeployment Keppel 18yrs

2010 Bluewater Kitan 344 ENI Australia/ Timor Leste Leased Redeployment Jurong 5yrs + 5yrs

2010 Modec Guara-Sapinhoá Pilot 2,140 Petrobras Brazil Leased Conversion Cosco Dalian 20yrs

2010 OSX Waimea 130 OGX Brazil Owned Conversion Samsung EPCI

2010 BWO TSB 100 Kangean Energy Indonesia Leased Conversion Jurong 10yrs + 4 yrs

2010 BWO Athena 130 Ithaca UK Leased Redeployment Dubai DryDocks 3yrs + 5 yrs

2010 SBM Offshore Lula Nordeste 2,131 Petrobras Brazil Leased Conversion Keppel 20yrs

2010 Hyundai Goliat 340 ENI Norway Owned Newbuild Hyundai EPC

2010 Sevan Huntington 120 E.ON UK Leased Redeployment Nymo 5yrs

2010 BLT Pagerungan 75 Kangean Indonesia Leased Redeployment Jurong 4yrs

2010 Petrofac Cendor Ph.2 70 Petrofac Malaysia Owned Conversion SapuraKencana EPC

2010 Daewoo CLOV 1,290 Total Angola Owned Newbuild Daewoo EPCC

2010 Teekay Bauna/Piracaba 277 Petrobras Brazil Leased Conversion Jurong 9yrs + 6yrs

2010 Teekay Aruana 980 Petrobras Brazil Leased Redeployment Aibel 2yrs

2010 Sembcorp (Jurong)

Roncador 1,600 Petrobras Brazil Owned Conversion Jurong EPC

2010 Keppel Parque das Baleias 1,400 Petrobras Brazil Owned Conversion Keppel EPC

2010 Petrobras (Engivix/GVA/ COSCO)

Pre-salt fields* 1,500 Petrobras Brazil Owned Newbuild Rio Grande Sul shipyard

EPCC for 8 units

2011 SBM Offshore Waimea 130 OGX Brazil Owned Conversion Keppel EPCI

2011 Petrofac Berantai 75

Petrofac/

Petronas Malaysia

Lease/

Owned Redeployment Keppel 7yrs

2011 Hyundai Quad 204 424 BP UK Owned Newbuild Hyundai EPC

2011 Modec Cernambi Sul 2,300 Petrobras Brazil Leased Conversion Cosco Dalian 20yrs

2011 Modec Waikiki Pero Inga (OSX 3)

110 OSX Brazil Owned Conversion Jurong EPCI

2011 OSX Campos Basin TBD OGX Brazil Owned Conversion TBD EPCI

2011 OSX Campos Basin TBD OGX Brazil Owned Conversion TBD EPCI

2011 McDermott Crux liquids TBD Nexus Energy Australia Owned Newbuild TBD EPC

2011 SBM Offshore Block 15/06 - Ngoma 1,421 ENI/Sonangol Angola Leased Redeployment Keppel 12yrs

2011 SBM Offshore Lula Nordeste 2,100 Petrobras Brazil Leased Conversion Keppel 20yrs

2011 Teekay Knarr 410 BG Norway Leased Newbuild Samsung 6yrs+14 or 10yrs+10

2011 Bumi Armada Balnaves 150 Apache Australia Leased Redeployment Keppel 4yrs+4

2011 Bumi Armada D1 85 ONGC India Leased Conversion Keppel 7yrs + 6yrs

21 June 2012 of 26


Snapshot of FPSOs currently deployed

There are currently 159 FPSOs in the world. Of the total inventory,

152 units are currently in service worldwide while 7 units are reported

as off field and available for reuse, down from 11 units a year ago.

Utilisation is high, at 96%. The Asia Pacific region (i.e. Asia and

Oceania) has the largest count, with 48 FPSOs in operation. This is

followed by the Americas (39): Latin (32), Central (5) and North (2),

Africa (38), Europe (23) and the Mediterranean (4).

Current deployment of global FPSO fleet: 159 units in the field

Legend

Number of FPSOs deployed in the region

Gulf Of Mexico

Australia/

NZ

Brazil

Far East

5

2

14

Canada

Northern

Europe

23

Africa

13

Mideast/

SW Asia

Mediterranean

3220

South East Asia38

7 Units of fhire

4

1

Sources: International Maritime Associates Inc, Upstream, Maybank-IB

Idle FPSOs available for hire

FPSO Owner Age profile (year)

Lease/ own

Type Processing capacity Storage capacity

Turret mooring system

Oil (bpd) Gas (mmscf)

Front Puffin Sea Production/ Rubicon

1990 Lease Conversion 40,000 - 730 Disconnectable

Munin Bluewater

1997 Lease Conversion 60,000 - 595 Submerged

production Lewek Arunothai Ezra/EOC

1980 Lease Conversion 6,000

(condensate) 175 725 Spread moored

Cossack Pioneer Petrofac

1972 Lease Conversion 150,000 115 1,150 External

Falcon SBM

1975 Lease Conversion 165,800 118 2,200 External

Noble Seillean Noble

1990 Lease Newbuild 24,000 12 300 Dynamic positioning

Nan Hai Kai Tuo ConocoPhillips

1992 Own Conversion 90,000 - 1,000 Internal discon-nectable


21 June 2012 of 26


10 new FPSOs were ordered to date (up to Jun 2012). In the first six

months of 2012, 10 units of FPSOs have been ordered, of which 8 are

new vessels while 2 are redeployments of existing FPSOs. These

vessels are scheduled to hit the market from 2012 to 2017.

FPSO contracts awarded in 2012

Company Field Oil company Country Ownership Shipyard Construction

type

Daewoo Ichthys Inpex Australia Owned Daewoo Newbuild

Blue Marine Mexican GOM Sea Production Gulf of Mexico Leased Keppel Redeployment

Blue Water Alma/Galia Enquest UK Owned Blohm & Voss Redeployment

PTSC/Yinson Thang Long/ Dong DO PetroVietnam/ Petronas Vietnam Leased Keppel Conversion

SBM Sapinhoá North Petrobras Brazil Leased CSSC Conversion

SBM Fram Shell UK Leased TBD Conversion Odebrecht/UTC/ OAS

Franco/Transfer of Rights pre-salt area*

Petrobras Brazil Owned Inhauma Shipyard Conversion

Sources: International Maritime Associates Inc, Upstream, Maybank-IB * a single order comprising 4 hulls

Current order backlog for FPSOs worldwide stands at 40 units,

consisting of 20 conversions, 14 newbuilds and 6 currently being

modified for re-deployment. Not included in the 40 units, are 3

speculative newbuild orders without field contracts (Sevan – 2 units,

Ramunia – 1 unit). Brazil currently dominates, with orders for 25 FPSOs

(16 conversions, 8 newbuilds and 1 redeployment), including 12 serial

pre-salt units. The underlying growth in Brazil is largely due to: (i)

Petrobras’ plans to develop a new pre-salt province entailing at

least 40 large-scale FPSOs and (ii) compliance with local content

clauses for FPSOs (up to 65%).

FPSOs in the pipeline – 40 units on order

Legend

Australia/

NZ

Brazil

Northern

Europe

Africa

South East Asia

Number of newbuild FPSOs to be deployed per region

3 Speculative units without contracts in hand

Gulf Of Mexico

Mideast/

SW Asia

1

1

1

1

16

8

1

1 1

1

1 1

2

3

1

Number of converted FPSOs to be deployed per region

Number of FPSOs to be redeployed per region

Sources: International Maritime Associates Inc, Maybank-IB

21 June 2012 of 26


FPSO outlook - positive

The FPSO market is at an early stage of the demand cycle, in our

view, with ample room for growth. Projection-wise, 200-250 new orders

for FPSOs are expected to enter the market over the next 5 years. The

orders are categorised into 2 core groups for: (i) visible and (ii) future

emerging projects.

(i) Visible projects: In the planning pipeline are 125 firm projects

that potentially could require FPSOs should the projects go to

development. FPSOs are the preferred production solution for 100

of these projects. The remaining 25 projects could require either

FPSOs or other types of production solutions (i.e. tension-legged

platform (TLP), semi-submersibles, SPAR). With a few exceptions,

all the projects are declared discoveries, some of which will require

multiple FPSOs for development.

(i) Future emerging projects: A reasonable estimate is that 75 to

125 FPSO projects will emerge over the next five years that are

not now visible. This estimate is based on an assessment of the

number of projects in the current planning list and were not visible

a few years ago.

FPSO: Supply and demand

20161998 2000 2004 20122006 20142008 20102002

250

200

150

100

50

199619941990 1992

(Units)

250

200

150

100

50

Producing FPSOs Idle units re employed High demand Base Low demand

Source: IHS

1. Sensitivities of projects

Insensitive

Based on the analysis of the 125 potential FPSO projects, it is

estimated that about 30% are relatively insensitive to short-term

market conditions.

21 June 2012 of 26


The decision to proceed will be based on long-term oil price

assumptions and potential of the project to build reserves.

The need to replace reserves and the opportunity to exploit large

hydrocarbon complexes provide continuous momentum for project

development.

This grouping comprises big projects involving large reservoirs

offshore Brazil and West Africa.

Sensitive

40% of the 125 projects are considered opportunistic projects,

which require a robust oil price environment to proceed.

They generally involve projects with relatively small reserves and

non-major oil operators.

These groupings are projects located in South East Asia.

Somewhat sensitive: 50/50

30% of the visible 125 FPSO projects are considered somewhat

sensitive to short term market conditions, where to some degree,

underlying short- to mid-term crude oil prices are taken into account

in making an investment decision.

These projects are spread over a wide spectrum of geographical

areas and generally involve fields with mid-size recoverable

reserves, heavy oil or difficult access.

Most likely scenario: 100-140 units by 2015. In our view, there will be

orders for 100 to 140 FPSOs over the next five years, averaging 20-28

new units p.a. over 2012-2015. This includes new units and

redeployments, which will generate capital expenditure (capex) of

USD65b-85b over this period. The bulk of the variation between the

three scenarios is in the small- to mid-size FPSO orders.

An 80:20 ratio for newbuilds and conversions vs. redeployments.

We gauge that 80% of the new FPSO orders will be satisfied via newly

built or converted units, while the remaining 20% of the FPSO projects

will be on a redeployment basis. All redeployments are likely to consist

of small- to mid-sized FPSOs.

Forecasted FPSO new orders over the next 5 years – 3 scenarios

Low case

Oil price: USD70-90/ bbl

Reasonable case

Oil price: USD90-110/ bbl

High case

Oil price: > USD110/ bbl

Types of FPSO Capex (USD’b)

Unit Capex (USD’b)



Large FPSOs

New converted units with 150-250,000 bpd 1.20 26 31.2 28 33.6 30 36.0

Topsides pre-salt hulls 0.80 8 6.4 8 6.4 8 6.4

Midsize FPSOs

New converted units with 80-150,000 bpd 0.60 24 14.4 29 17.4 34 20.4

Topside spec hulls 0.25 3 0.8 3 0.8 3 0.8

Modified redeployed FPSOs 0.30 3 0.9 4 1.2 5 1.5

Small FPSOs

New converted units below 80,000 bpd 0.40 25 10.0 34 13.6 42 16.8

Modified redeployed FPSOs 0.15 11 1.7 14 2.1 18 2.7

Total 100 65.4 120 75.1 140 84.6

Sources: International Maritime Associates Inc, Maybank-IB

21 June 2012 of 26


Snapshot of FPSO orders over the next 5 years – by size

34 36 38

3036

42

36

48

60

78

100

120

140

0

40

80

120

160

Past five years Low scenario: USD 70-90 oil

Base scenario: USD 90-110 oil

High: scenario: USD 110-150 oil

(Units) Large FPSOs Midsize FPSOs Small FPSOs Series4

Sources: International Maritime Associates, Inc, Maybank-IB

Buoyant environment for the FPSO market over the next two

years. Putting things into perspective, the demand-supply outlook for

FPSOs appears promising. We expect 15-20 firm FPSO awards for

2012-13 (medium-term outlook). Based on the project pipeline,

upcoming projects will most likely come from Asia-Pacific and Africa,

and involve leased conversions.

Chronology of idle FPSOs

Company Vessel 1Q 2011 2Q 2011 3Q 2011 4Q 2011 1Q 2012

Bumi Armada Griffin Venture Off-hire Off-hire Hired Hired Hired Sea Production Crystal Ocean Off-hire Off-hire Off-hire Off-hire Hired

Bluewater Uisge Gorm Off-hire Off-hire Off-hire Off-hire Sold to Enquest

Wooside Cossack Pioneer Off-hire Off-hire Sold to Petrofac Off-hire Off-hire

PetroVietnam Ruby Princess Off-hire Scrapped - - -

PTTEP Challis Venture Off-hire Scrapped - - -

PTTEP Jabiru Venture Off-hire Scrapped - - -

SBM Falcon Off-hire Off-hire Off-hire Off-hire Off-hire

Nobel Seillean Off-hire Off-hire Off-hire Off-hire Off-hire

Sea Production Front Puffin Off-hire Off-hire Off-hire Off-hire Off-hire

ConocoPhillips Nan Hai Kai Off-hire Off-hire Off-hire Off-hire Off-hire

Ezra/ EOC Lewek Arunothai Hired Hired Hired Off-hire Off-hire

CNOOC Hai Yang Shi You (overhaul) (overhaul) (overhaul) (overhaul) Off-hire (overhaul)

Total units off- hire and available 11 8 7 8 7


21 June 2012 of 26


Opportunities – screening and selecting prospects

Target, focus and criteria. Based on the set criteria (i.e. geographical

and geological traits, technical traits, field operations), we gauge that

the FPSO lease operators under our coverage (i.e. Bumi Armada,

Yinson, Perisai) will most likely focus on:

(i) small-sized FPSO projects, (ii) converted FPSOs, (iii) the Asian and

African markets, and (iv) oil companies that typically lease FPSOs

(still developing their own skill sets or balance sheet strength).

Screening prospects

(i) Geographical & geological traits

- Water depth: shallow water most likely - Region: Asia Pacific preferred, followed by Africa

(ii) Technical traits

- Size of FPSO: Preferably small, medium is possible - Design: Conversions and redeployments. Newbuilds ruled out due to capex

and balance sheet constraints.

(iii) Field operators

- Small independent operators with small balance sheet that can afford only leases

- New NOCs seeking JVs to build up technical capabilities

(iv) Production timeline

- Planned first oil/ gas production by 2015 (latest)


Selecting prospects: 21 projects passed criteria. Based on these settings, of the 120 projects identified, 21 projects passed our internal screening criteria. They are located in 8 countries: Malaysia (6), Indonesia (5), Vietnam (4), India (2), Australia (1), Nigeria (1), the Philippines (1) and United Kingdom (1).

Snapshot of projects that fit Maybank-IB’s selection screening criteria

Status Country Field Operator Water depth (m)

First oil possible

Planned or being studied Australia Lady Nora Woodside 80 2014

Bidding/ final design India C7 ONGC 85-90 2013

Planned or being studied India GS 29 ONGC 80-12 2014

Bidding/ final design Indonesia Salawati PetroChina 75 2013

Bidding/ final design Indonesia Madura BD Husky/CNOOC 55 2014 Planned or being studied Indonesia Badik Anadarko 70 2014 Planned or being studied Indonesia Ande Ande Lumut Awe 100 2014 Bidding/ final design Indonesia Bukit Tua Petronas 100 2014 Bidding/ final design Malaysia Kamelia Petronas/ Hess 55 2013

Planned or being studied Malaysia Bunga Dahlia and Teratai Petronas 65-70 2014

Bidding/ final design Malaysia Belud Hess 155 2014

Planned or being studied Malaysia E6 Shell 100 2014

Planned or being studied Malaysia NC3/Spaoh Petronas 80 2014

Planned or being studied Malaysia Balai Cluster Roc Oil 60 2015

Planned or being studied Nigeria Bilabri/ Orobiri Peak 40-300 2014 Planned or being studied The Philippines West Linapucau Pitkin Petroleum 350 2014

Bidding/ final design UK Kraken (Blk 9/2b) EnQuest 100 2015

Bidding/ final design Vietnam Ham Rong (Blk 102/106) Petronas 25-30 2013

Planned or being studied Vietnam Lac Da Vang PetroVietnam 48 2013

Bidding/ final design Vietnam Gau Chua PetroVietnam/Petronas 120 2014

Planned or being studied Vietnam Dai Nga Idemitsu 120 2015


21 June 2012 of 26


Companies’ prospects

Bumi Armada (BAB MK; BUY; TP: MYR4.88). We reckon Bumi

Armada is best placed to capitalise on the prospect of strong global

FPSO demand. It has the balance sheet to fund 2-3 new FPSOs p.a.,

and the execution track record and engineering skill sets to deliver

FPSOs on time. We understand that that it is currently bidding for 6-8

tenders including Kraken (UK), Kamelia, Belud, E6 (Malaysia), Madura

(Indonesia) and Cluster 7 (India).

Perisai (PPT MK; BUY; TP: MYR1.20). We do not rule out the

possibility of Perisai partnering with Emas Offshore (EOC) to charter an

FPSO for the Kamelia gas field project. EOC was recently awarded a

Letter of Intent (LOI) from Hess, beating several keen competitors, due

to its ability to rapidly deliver an FPSO, by 2013 in this case. It will likely

modify the FPSO Arunothai to suit the field‟s production requirements.

Yinson (YNS MK; BUY; TP: MYR2.54). Yinson is the new kid on the

FPSO block. It recently clinched its first FPSO job via a JV with

PetroVietnam Technical Services Corporation (PTSC) for the Lam Son

project. The 7+3-year FPSO bare-boat contract worth USD737.3m

requires an FPSO with 18,000 bpd processing capacity and storage for

350,000 bbls. The FPSO will be converted in Singapore, costing c.

USD400m in capex.

SapuraKencana Petroleum (SAKP MK; BUY; TP: MYR2.68). It will

partner Petrofac on a 49:51 basis to own and charter the FPSO

Berantai (formerly known as FPSO East Fortune) for the development

of the Berantai field. The lease contract charter is for a firm 7 years with

the option to extend for another 8 years. Capex for the FPSO is about

USD345m. First gas production is expected in 2H12.

Risks

The FPSO industry‟s wide-ranging operations and geographical profile

exposes operators to a broad spectrum of operational, geographical

and environmental risks. Below is a non-exhaustive list of the major risk

factors faced by FPSO operators.

Global economic conditions and oil price levels affect investment

plans. Oil companies‟ investment plans are dependent on long-term oil

price expectations. Oil field exploration/developments were shelved

when oil prices fell below USD50/bbl (average) in 2008. Our economics

team projects an average crude oil price of USD105-115/bbl (Brent) for

2012-13, which is conducive for oil & gas exploration/development

activities. The FPSO market is also cyclical; an economic slowdown will

affect new sales.

Execution and delayed delivery risks. FPSO contracts encompass

turnkey contracts for the vessels‟ construction, conversion or

refurbishment. Operators face late delivery risk and construction cost

overruns during this phase. FPSO operators are heavily dependent on

multiple vendors throughout the process, for equipment, manpower and

yard space, and need the management expertise to oversee the job.

Post deployment, FPSO operators need to maintain a pre-agreed

commercial uptime. Also, the risk of their contracts being terminated

early is not to be disregarded.

21 June 2012 of 26


Financial leverage. Operators do and will maintain a significant level of

leverage in line with industry norms. Capex is intensive during the

construction of new FPSOs and extensive refurbishments are required

for the redeployment of FPSOs.

Prospective floating solution projects identified

Country Operator Description

Malaysia PETRONAS/ Hess/

Shell/Roc Oil

• There are up to 3FPSO projects, which could be awarded in Malaysia this year, while another 3 jobs are

expected to roll out in 1-2 years. They are:

Hess‟ SB 302 (Belud @ North Sabah),

Hess‟ PM301/PM325 (Kamelia @ North Malay basin),

Petronas Carigali-Talisman‟s PM302 (Bunga Dahlia and Teratai @ North Malay basin),

Roc Oil‟s Balai Cluster,

Shell‟s SK308 (E6) and

Petronas‟ Spaoh field (NC3)

• The initial 3 are “fast-tracked” projects brought forward to boost Malaysia‟s declining oil production and gas

supply needs; first gas/oil is targeted for 2013- 2014.

• Kamelia: FPSO + wellhead platforms. Hess is understood to have given a Letter Of Intent (LOI) to Emas

Offshore for the supply of a FPSO. This is a fast track program, for Hess is expected to begin the charter

in 1Q2013, though the timeline appears challenging as there is no news yet of a final award being made.

However SapuraKencana has already received a contract in December 2011 to build the wellhead

platform, which in essence firms up the development plan.

Emas has proposed to modifying the FPSO Lewek Arunothai, which became available following the

termination of its charter from the Arthit field offshore Thailand. The FPSO is likely to undergo

modification/refurbishment in Singapore before commencing the contract with Hess.

• Belud: FPSO + wellhead platform. It has been reported that the M3nergy and EMAS Offshore consortium

submitted the lowest bid in a recent tender to lease an FPSO for 7 years firm with options to extend up to

an additional 8 years. However, considering that the FPSO Arunothai will be deployed for the Kamelia

field, Hess is reported to have offered Bumi and Ramunia-MISC a second chance to match the

consortium‟s bid.

• Bunga Dahlia & Teratai: PETRONAS-Talisman‟s Bunga Dahlia/ Teratai projects will require an FPSO for

field development. With both fields targeted to achieve first gas by 2014, we expect contract awards

sometime this year. Should M3Nergy win the Belud job, we reckon either Bumi or Ramunia-MISC could

secure the Bunga Dahlia & Teratai fields.

• Balai Cluster: FPSO + wellhead platform. Roc Oil, Dialog and Petronas have formed a JV to act as the

service contractor group under a risk service contract with payment based on performance indicators. A

small FPSO with limited production capability is being considered for use in the pre-development phase,

which is scheduled to extend over 18 months. Capex for the pre-development phase is estimated between

USD200-250m.

• E6: FPSO. Gas/oil discovery on Block SK308 about 200 km offshore Sarawak. Gas produced on SK308 is

earmarked for delivery by pipeline to the Petronas LNG complex in Bintulu. FPSO would be used to

extract and export oil and condensate. Award envisioned by 2013.

• Spaoh: The Spaoh field (NC3) will likely use an FPSO+ fixed platform, or FLNG. Preliminary indication of

combined reserves is 100 mil bbls oil, 2.8 tcf gas. Further appraisal is being planned. This field will hit first

oil by 2014/16.

India ONGC • ONGC is expected to announce 2 FPSO projects in 1-2 years. They are:

i) Cluster 7 and

ii) GS 29

• Cluster 7: FPSO + wellhead platforms. The project plans to utilize a small FPSO develop the

marginal Cluster 7 oil field off Mumbai. The FPSO for Cluster 7 is required to have 30,000 bpd oil and

63 mmscfd gas processing capacity. Bids for the FPSO submitted in March „12.

• GS 29: FPSO + wellhead platform. This is a shallow water field around 20 km southeast of Kakinada

in water depth of 80 to 120 meters. The project has been around a while. ONGC Has invited

expressions of interest in supplying an FPSO for GS 29, offering a potential 2+3 year lease contract.

Sources: International Maritime Associates, Inc, Upstream online, Maybank-IB

21 June 2012 of 26


Prospective floating solution projects identified (continued)

Country Operator Description

Vietnam PetroVietnam/

PETRONAS

• There are 4 more FPSO projects on the horizon for Vietnam, 2 of which could be awarded as soon as

end this year. They are:

(i) Ham Rong (Blk 102/106),

(ii) Lac Da Vang,

(iii) Gau Chua and

(iv) Dai Nga

• The Vietnamese market has proven to be exciting enough, kicking-off the action with the award of

Lam Son’s FPSO to Yinson-PTSC.

• Gau Chua-Ca Cho: Petronas/ PetroVietnam are evaluating the use of a small FPSO + wellhead

platforms to develop a marginal field in the South Vietnamese Nam Con Son basin. This shallow

water basin is the largest oil and gas bearing basin in Vietnam. We believe this project will call for a

small FPSO, c. 8,000-10,000 bpd processing capability, with first oil targeted for 2014.

• Ham Rong: This project located in the Gulf of Tonkin (Northern Vietnam) could use an FPSO (c.

25,000 bpd processing) or MOPU + FSO combination; first oil is targeted for 2013. Petronas operates

the block with a 50% interest. Partners are ATI (20%), PetroVietnam (20%) and PetroChina (10%).

• Lac Da Vang: FPSO+ wellhead platforms or MOPU + FSO. This project consists of 2 shallow water

discoveries in the southern part of block 15-1/05. The Lac Da Vang reservoir appears to have very

light 430 API oil. PetroVietnam is the operator with a 40% interest. Total has 35%, SK Energy 25%. A

second discovery, Lac Da Nau lies 15 km to the southwest.

• Dai Nga: FPSO or platform + FSO. Idemitsu operated O&G discovery in the Nam Con Son basin

about 300 km SE of Ho Chi Minh City. Evaluation of the find's commerciality is in progress. First oil

could possibly be in 2015.

Indonesia Anadarko/ Awe/

Husky/ CNOOC/

PetroChina/

PETRONAS

• There are 5 FPSO projects expected to be rolled out in Indonesia for the next 1-2 years. They are:

(i) Husky/ CNOOC‟s Madura BD

(ii) Petronas‟ Bukit Tua,

(iii) PetroChina‟s Salawati,

(iv) Awe‟s Ande Ande Lumut and

(v) Anadarko‟s Badik

• Madura DB: FPSO. Pre-qualification for supply of the FPSO has begun. FPSO EPCI/lease contract

award planned for late ‟12. Lease for 10 yrs + 5 option years. Unit to have capability to process 110

mmscfd gas and 8,000 bpd condensate and store 370,000 bbls. Development plan approved by

gov‟t. Field 60 km offshore, estimated to bbls condensate reserves. Production estimates are 100

mmscfd gas, 6,500 bpd condensates.

• Bukit Tua: FPSO + wellhead platform. Multiple bids for FPSO are currently being evaluated but

M3nergy is tipped to be the lead bidder. The contract calls for a leased unit with 50,000 bpd

processing, 600,000 bbls storage. Cabotage rules require the unit to be Indonesian registered.

• Salawati: FPSO. PetroChina has requested bids for a leased FPSO for use on the Salawati field off

Irian Jaya/Papua. This will be a small unit with storage for 260,000 barrels. BLT is indicated as the

likely supplier of the unit for Salawati but their current financial difficulties raise questions about the

status of their bid.

• Ande Ande Lumut: FPSO + wellhead platform. AWE in early 2012 acquired the Ande Ande Lumut

field from Genting O&G. This shallow water field in northwest Natuna offshore Indonesia has

estimated recoverable reserves of 76 million barrels. AWE plans to utilize a small FPSO with oil

processing capacity or 40,000 bpd. The development paln envisions 43 horizontal wells.

• Badik: FPSO+ wellhead platforms or MOPU + FSO. Oil/gas find in the Tarakan Basin. Exploration

well encountered 133 net feet of oil/gas play. Anadarko operates block with 35% interest.

UK Enquest • Kraken (Blk 9/2b): FPSO. Bids being evaluated for a leased FPSO with capability to process 60,000

bpd oil. Proven reserves estimated at 89 mil bbls, this is a heavy oil field (API 150). Development plan

to be submitted in 3rd qtr „12, with first oil scheduled in 4rd qtr „15. Enquest is operator with 25%

interest. Nautical has 25%, First Oil Expro 30%, Canamens Energy 20%.

Sources: International Maritime Associates, Inc, Upstream online, Maybank-IB

21 June 2012 of 26


Choice between leased and owned FPSOs among oil companies

1

1

1

1

2

2

2

2

2

2

2

2

3

3

4

4

6

20

12

7

5

2

2

6

3

1

1

7

4

3

2

4

2

2

28

CNOOC

Total

OSX/OGX

Maersk O&G

Hess

BP

Woodside

Apache

Premier

ExxonMobil

Chevron

Petrovietnam

Statoil

Talisman

Murphy

Addx

Kangean

Shell

Petronas

Pemex

CNR

ENI

Petrobras

Leased FPSOs Owned FPSOs


Snapshot of global FPSO operators (by lease unit)

1314

8 8

43

1

42

32 2

2

2 2

24

1 1

1

11

0

3

6

9

12

15

18

SBM BW Modec Teekay Bluewater Bumi Armada OSX Maersk Petrofac Fred Olsen Saipem Sea Production

(Units) Existing Fleet On Orderbook Idle


21 June 2012 of 26


Bumi Armada Powering Up

Maintain BUY and MYR4.88 TP. Bumi Armada (BA) offers focused

exposure to the Floating Production, Storage and Offloading (FPSO)

market. As one of the fastest-growing FPSO operators in the world, it

has set its sights on being a top 4 player in terms of FPSO fleet size, by

2013. It is also poised to gain traction in Malaysia‟s O&G sector, as it

leverages on PETRONAS‟ capex programme. BA is a steady growth

stock with balance sheet strength and proven execution capabilities.

Out TP is based on sum-of-parts valuations.

In an entrenched position to ride on global E&P programmes. We

see numerous opportunities for BA to capitalise on the: (i) 125 potential

FPSO projects worldwide, (ii) requirement for new, highly technical

OSVs to support global deepwater programmes, (iii) services for the

subsea umbilicals, risers and flowlines (SURF), inspection, repair and

maintenance (IRM) markets, and (iv) increasing number of offshore

development projects in Malaysia (marginal field and Enhanced Oil

Recovery (EOR) development) and the Caspian region.

Set to embark on an aggressive asset expansion plan. We see BA

prospecting for new assets for growth. BA will likely double its FPSO

assets, triple its SURF vessels and add up to 8 new OSV vessels to its

fleet by 2015. This is possible as it has the balance sheet to support the

heavy capex (estimated at MYR6.4b) for its expansion programme

while keeping its net gearing below the 1.5x threshold.

Powering up - where growth and aspirations meet. We project a 3-

year net profit CAGR of 25%. All divisions will contribute to growth,

fuelled by new vessels progressively coming onstream, and higher

utilisation of its existing vessels. This is a sensible aspiration, which

would propel BA into becoming the fourth largest FPSO operator

globally.

A towering growth stock with rewarding returns. With a 3-year

forecast net profit CAGR of 25%, its relentless pursuit of excellence will

secure Bumi Armada the status of fastest-growing operator among its

global peers. However, given prospects for high growth, we believe that

it is unlikely that BA will reward shareholders with meaningful dividends

in the foreseeable future.

Bumi Armada – Summary Earnings Table

FYE Dec (MYR m) FY10A FY11A FY12F FY13F FY14F Revenue 1,241.4 1,543.9 1,800.7 2,220.6 2,504.3

EBITDA 715.6 845.1 1,048.7 1,272.6 1,442.0

Recurring Net Profit 350.8 387.3 532.6 627.5 706.9

Recurring Basic EPS (Sen) 12.0 13.2 18.2 21.4 24.1

EPS growth (%) 26.4 10.4 37.5 17.8 12.6

DPS (Sen) 0.0 2.5 0.0 0.0 0.0

PER 34.0 30.8 22.4 19.0 16.9

EV/EBITDA (x) 21.0 16.2 13.7 11.7 10.3

Div Yield (%) 0.0 0.6 0.0 0.0 0.0

P/BV(x) 13.6 3.4 3.0 2.6 2.2

Net Gearing (%) 359.0 49.9 61.9 63.2 54.6

ROE (%) 40.1 10.9 13.3 13.5 13.2

ROA (%) 10.8 9.3 9.2 9.2 9.1

Consensus Net Profit (MYR m) - - 554.8 692.2 795.9

Source: Maybank-IB

Buy (unchanged)

Share price: MYR4.09 Target price: MYR4.88 (unchanged)

Wong Chew Hann, CA [email protected] (603) 2297 8688

Chong Ooi Ming [email protected] (603) 2297 8676

Stock Information

Description: Integrated Oilfield services provider with 4 core operations: FPSOs, OSVs, T&I vessels and offshore field services.

Ticker: BAB MK Shares Issued (m): 2,928.5 Market Cap (MYR m): 11,918.8 3-mth Avg Daily Turnover (USD m): 6.16

KLCI: 1,594.98 Free float (%): 27.0 Major Shareholders: %

Objektif Bersatu Sdn Bhd 42.4 Ombak Damai Sdn Bhd 11.3 EPF 6.9 PNB 5.8 Karisma Mesra Sdn Bhd 5.4

Key Indicators

Net cash / (debt) (MYR m): (1,824.7) NTA/shr (MYR): 1.21 Net Gearing (x): 0.5

Historical Chart

3.0

3.3

3.6

3.9

4.2

4.5

Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12

BAB MK Equity

Performance:

52-week High/Low MYR4.50/MYR3.03

1-mth 3-mth 6-mth 1-yr YTD

Absolute (%) 4.9 (4.9) (0.2) - (0.7)

Relative (%) 0.8 (6.3) (9.1) - (4.9)

21 June 2012 of 26


INCOME STATEMENT (MYR m) BALANCE SHEET (MYR m)

FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F

Turnover 1,543.9 1,800.7 2,220.6 2,504.3 Net Fixed Assets 4,201.2 5,274.3 6,247.5 6,840.7

Cost of goods sold (883.1) (984.8) (1,226.2) (1,383.6) Invts in Assocs & JVs 151.3 207.6 264.3 332.0

Gross profit 660.8 815.9 994.4 1,120.7 Other LT Assets 423.3 423.3 423.3 423.3

Other operating (exp)/inc. (142.5) (194.1) (248.7) (285.6) Cash & ST Invts 1,248.5 990.5 1,539.2 1,554.1

EBIT 518.3 621.8 745.7 835.2 Other Current Assets 912.0 965.5 1,053.2 1,112.4

Net int (exp)/ Inc (109.2) (113.0) (138.2) (155.7) Total Assets 6,936.2 7,861.3 9,527.5 10,262.5

Associates & JV 26.8 56.3 56.7 67.7

Exceptional gain/ (loss) (27.7) 0.0 0.0 0.0 ST Debt 447.4 447.4 447.4 447.4

Pretax profit 435.9 565.2 664.3 747.2 Other Current Liab 353.1 373.1 405.7 427.8

Tax (70.6) (27.0) (30.8) (34.3) LT Debt 2,559.8 3,000.0 4,000.0 4,000.0

Minority interest (5.7) (6.0) (6.0) (6.0) Other LT Liab 33.2 33.2 33.2 33.2

Net profit 359.7 532.2 627.5 706.9 Shareholders Equity 3,528.0 3,987.0 4,614.5 5,321.4

Net profit ex EI 387.3 532.2 627.5 706.9 Minority Interest 14.7 20.7 26.7 32.7

Total Cap. & Liab 6,936.2 7,861.3 9,527.5 10,262.5

EBITDA 845.1 1,048.7 1,272.6 1,442.0

Sales Growth (%) 24.4 16.6 23.3 12.8 Share capital 2,928.5 2,928.5 2,928.5 2,928.5

EBITDA Growth (%) 18.1 24.1 21.4 13.3 Net Debt 1,758.7 2,456.9 2,908.2 2,893.3

EBIT Growth (%) 10.9 20.0 19.9 12.0 Working capital 1,360.0 1,135.6 1,739.3 1,791.2

Effective Tax Rate (%) 16.2 4.8 4.6 4.6 Gross gearing 85.2 86.5 96.4 83.6

CASH FLOW (MYR m) RATES & RATIOS


Net profit 387.3 532.2 627.5 706.9 Gross Margin (%) 42.8 45.3 44.8 44.8

Dep. & amortization 326.8 426.8 526.8 607.8 EBITDA Margin (%) 54.7 58.2 57.3 57.6

Chg. In working capital (596.6) (33.6) (55.0) (37.1) EBIT Margin (%) 33.6 34.5 33.6 33.3

Other operating CF 212.6 (50.3) (50.7) (61.7) Net Profit Margin (%) 25.1 29.6 28.3 28.2

Operating CF 330.2 875.1 1,048.7 1,215.8 ROAE (%) 17.6 14.2 14.6 14.2

Net capex (1,058.7) (1,500.0) (1,500.0) (1,200.0) ROA (%) 9.3 9.2 9.2 9.1

Chg in LT investment 0.0 0.0 0.0 0.0 ROCE (%) 9.7 10.2 10.2 10.2

Chg in other assets (1,058.7) (1,500.0) (1,500.0) (1,200.0) Div Payout Ratio (%) 17.9 0.0 0.0 0.0

Investment CF (1,167.6) (1,500.0) (1,500.0) (1,200.0) Interest Cover (x) 4.7 5.5 5.4 5.4

Net chg in debt (410.4) 440.2 1,000.0 0.0 Debtors Turn (days) 60.3 70.4 68.6 71.5

Chg in other LT liab. 2,218.5 (73.2) 0.0 0.0 Creditors Turn (days) 90.7 63.1 60.2 63.1

Other financing CF 0.0 0.0 0.0 0.0 Inventory Turn (days) 0.6 0.6 0.6 0.6

Financing cash flow 1,808.1 367.0 1,000.0 0.0 Current Ratio (x) 2.7 2.4 3.0 3.0

Net cash flow 970.7 (258.0) 548.7 15.8 Quick Ratio (x) 2.7 2.4 3.0 3.0

Net Debt/Equity (x) 0.5 0.6 0.6 0.5

Capex to Debt (%) 0.4 0.4 0.3 0.3

N.Cash/(Debt)PS (sen) (60.1) (83.9) (99.3) (98.8)

Opg CFPS (sen) 31.6 31.0 37.7 42.8

Free CFPS (sen) (24.9) (21.3) (15.4) 0.5

Sources: Company, Maybank-IB

21 June 2012 of 26


Perisai Petroleum Building Traction, Creating Waves

Maintain BUY; TP at MYR1.20. We remain positive on Perisai‟s growth

prospects, management focus and balance sheet strength. It could next

feature in Malaysia‟s FPSO scene with Ezra, as it seeks to leverage on

EOC‟s assets and experience. Recall that Hess has given a Letter of

Intent to EOC‟s unit, EMAS Offshore, to charter an FPSO for the North

Malay basin field. A successful FPSO partnership with Ezra would

catapult Perisai onto a new growth path and reinforce our conviction

BUY call. Our TP pegs Perisai at 11x 2013 EPS.

An FPSO venture in the pipeline? We think Perisai could move into

the FPSO charter market for its next Malaysian project. This will be

positive and would be a catalyst for growth. Its major shareholder Ezra

will likely play a role, for the targeted project and FPSO (i.e. Arunothai)

is owned by Ezra‟s 46.5%-associate EOC. Based on our back of the

envelope calculation, Perisai should recognise net profit of MYR23m-

27m p.a. assuming (i) a 50% stake on a USD250m-300m asset cost, (ii)

70:30 debt-to-equity financing and (iii) 20% ROE.

Balance sheet prudence to match growth aspiration. While Perisai

is the preferred (but not exclusive) partner and distribution channel for

Ezra in the Malaysia O&G market and could ride on Ezra‟s experience

and skill sets in the floating solutions space, Perisai is risk- and balance

sheet-conscious. The size of its balance sheet and opportunities ahead

will dictate the pace of its growth. With a low net debt of MYR224m

translating to net gearing of 0.7x, Perisai could leverage up by a further

MYR500m while keeping its net gearing level below the 1.5x threshold.

Changes at the shareholder level. Managing Director, Zainol Izzet

Mohamed Ishak has exercised an option to acquire 66m Perisai shares

at 48.5sen per share granted to him by HCM Logistics Limited (HCM), a

subsidiary of Ezra. Upon the completion of the exercise, Zainol Izzet will

be the fourth largest shareholder of Perisai with a 7.7% stake, while

Ezra‟s stake will diminish to 16.1% from 23.8%. We view this positively,

as it will strengthen Zainol Izzet‟s commitment to take Perisai to a

higher level.

Perisai Petroleum – Summary Earnings Table

FYE Dec (MYR m) 2010A 2011A 2012F 2013F 2014F Revenue 75.2 82.4 186.3 187.1 188.1 EBITDA 39.9 52.6 142.9 145.9 148.9 Recurring Net Profit 10.3 21.3 91.0 92.3 92.4 Recurring Basic EPS (Sen) 1.5 2.8 10.7 10.8 10.8 EPS growth (%) (72.6) 87.8 278.2 1.4 0.1 DPS (Sen) 0.0 0.0 0.0 0.0 0.0 PER 59.5 31.7 8.4 8.3 8.3 EV/EBITDA (x) 8.8 7.8 4.3 3.3 2.4 Div Yield (%) 0.0 0.0 0.0 0.0 0.0 P/BV(x) 2.6 2.1 1.7 1.4 1.2 Net Gearing (%) 70.6 69.5 97.3 55.8 26.7 ROE (%) 4.4 5.7 18.3 15.4 13.2 ROA (%) 4.3 5.4 12.0 10.2 9.6 Change in net profit (%) n.a. n.a. n.a. n.a. n.a. Consensus Net Profit (RM m) n.a. n.a. 88.2 91.0 91.7

Source: Maybank-IB

Buy (unchanged)


Wong Chew Hann, CA [email protected] (603) 2297 8688

Stock Information

Description: An oil & gas service provider owning a MOPU, a pipelay barge and 8 OSVs Ticker: PPT MK

Shares Issued (m): 851.8 Market Cap (MYR m): 758.1 3-mth Avg Daily Turnover (USD m): 1.35 KLCI: 1,594.98

Free float (%): 46.7 Major Shareholders: % Ezra 23.8

Mercury Pacific Marine 10.6 Lynear Plus 8.2

Key Indicators

Net cash / (debt) (MYR m): (387.4) NTA/shr (MYR): 0.15 Net Gearing (x): 1.0

Historical Chart

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12

PPT MK Equity

Performance:



Absolute (%) 5.3 (2.2) 31.9 16.3 20.3

Relative (%) 1.2 (3.6) 23.0 14.0 16.1

21 June 2012 of 26




Revenue 82.4 186.3 187.1 188.1 Fixed Assets 500.8 617.0 588.2 559.4

EBITDA 52.6 142.9 145.9 148.9 Other LT Assets 125.6 278.4 278.4 278.4

Depreciation & Amortisation (22.0) (35.8) (36.8) (36.8) Cash/ST Investments 40.9 32.2 162.0 291.9

Operating Profit (EBIT) 30.6 107.1 109.1 112.1 Other Current Assets 109.8 147.9 148.2 148.6

Interest (Exp)/Inc (4.7) (8.0) (10.8) (13.7) Total Assets 777.1 1,075.4 1,176.8 1,278.2

Associates (0.0) 0.0 0.0 0.0

One-offs 0.0 0.0 0.0 0.0 ST Debt 116.5 120.0 120.0 120.0

Pre-Tax Profit 26.9 101.1 101.3 101.4 Other Current Liabilities 114.9 121.1 121.1 121.2

Tax (3.1) (2.3) 0.0 0.0 LT Debt 148.0 337.9 337.9 337.9

Minority Interest (2.6) (7.9) (9.0) (9.0) Other LT Liabilities 24.7 0.0 0.0 0.0

Net Profit 21.3 91.0 92.3 92.4 Minority Interest 51.0 58.9 67.9 76.9

Recurring Net Profit 21.3 91.0 92.3 92.4 Shareholders' Equity 321.9 437.6 529.8 622.2

Total Liabilities-Capital 777.1 1,075.4 1,176.8 1,278.2

Revenue Growth % 9.6% 126.1% 0.4% 0.5%

EBITDA Growth (%) 32.0% 171.5% 2.1% 2.1% Share Capital (m) 753.8 851.8 851.8 851.8

EBIT Growth (%) 58.9% 249.6% 1.9% 2.7% Gross Debt/(Cash) 264.5 457.9 457.9 457.9

Net Profit Growth (%) 107.2% 327.4% 1.4% 0.1% Net Debt/(Cash) 223.7 425.7 295.9 166.0

Recurring Net Profit Growth (%) 107.2% 327.4% 1.4% 0.1% Working Capital (80.7) (61.0) 69.1 199.2

Tax Rate % 11.5% 2.3% 0.0% 0.0%



Profit before taxation 21.3 91.0 92.3 92.4 EBITDA Margin % 63.9% 76.7% 78.0% 79.2%

Depreciation 22.0 35.8 36.8 36.8 Op. Profit Margin % 37.2% 57.5% 58.3% 59.6%

Net interest receipts/(payments) 4.7 8.0 10.8 13.7 Net Profit Margin % 25.8% 48.8% 49.3% 49.1%

Working capital change 26.7 (31.9) (0.2) (0.3) ROE % 7.7% 24.0% 19.1% 16.0%

Cash tax paid (3.1) (2.3) 0.0 0.0 ROA % 3.5% 9.8% 8.2% 7.5%

Others (incl'd exceptional items) (19.8) 0.2 (4.8) (7.7) Net Margin Ex. El % 25.8% 48.8% 49.3% 49.1%

Cash flow from operations 51.8 100.7 134.8 134.9 Dividend Cover (x) nm nm nm nm

Capex (0.1) (150.0) (5.0) (5.0) Interest Cover (x) 6.5 13.4 10.1 8.2

Disposal/(purchase) (47.3) 0.0 0.0 0.0 Asset Turnover (x) 0.1 0.2 0.2 0.1

Others 0.7 0.0 0.0 0.0 Asset/Debt (x) 2.9 2.3 2.6 2.8

Cash flow from investing (46.7) (150.0) (5.0) (5.0) Debtors Turn (days) 82.2 96.5 133.5 133.4

Debt raised/(repaid) 73.2 193.3 0.0 0.0 Creditors Turn (days) 72.0 67.0 98.2 103.7

Equity raised/(repaid) (63.7) (152.8) 0.0 0.0 Inventory Turn (days) na na na na

Dividends (paid) 0.0 0.0 0.0 0.0 Net Gearing % 69.5 97.3 55.8 26.7

Interest payments 0.0 0.0 0.0 0.0 Debt/ EBITDA (x) 5.0 3.2 3.1 3.1

Others 0.0 0.0 0.0 0.0 Debt/ Market Cap (x) 0.4 0.7 0.7 0.7

Cash flow from financing 9.5 40.5 0.0 0.0

Change in cash 14.7 (8.7) 129.8 129.9

Sources: Company, Maybank IB

21 June 2012 of 26


Yinson Holdings Rising to the Clouds

Maintain BUY, geared for growth. Yinson has clinched its first FPSO

job via a JV with PetroVietnam Technical Services Corporation (PTSC).

This adds an estimated MYR27m p.a. to Yinson‟s earnings over the

next decade. We do not rule out Yinson eying further PETRONAS and

PetroVietnam contracts, and expanding further in Malaysia. Our sum-

of-parts (SOP) TP of MYR2.54 offers 18% upside.

An emerging floating solutions player. The Yinson-PTSC JV win for

the Lam Son FPSO bare-boat charter project worth USD737.3m

(MYR2.4b) is noteworthy on multiple fronts. Not only is it Yinson‟s

second floating solution project win, it also marks Yinson‟s debut as a

contractor for PETRONAS and an FPSO operator, and endorses its

capabilities in the floating solutions space. It is also a boost to

earnings, offering long term earnings visibility and rewarding IRRs.

Sailing high, riding on the Asian market. We believe that Yinson is

still hungry for a third floating solutions project. Opportunities will arise

primarily from the Malaysian and Vietnamese offshore O&G markets.

With 6 and 4 FPSO projects respectively, Malaysia and Vietnam house

almost half of the 21 upcoming FPSO projects. While Yinson‟s gearing

and the ability to raise financing remains the primary hurdle, we think

that Yinson‟s appetite remains for a third floating solutions contract.

3-year net profit CAGR of 47%, still with upside bias. We expect

18% net profit growth in FY1/13, fuelled by two new AHTS vessels.

Earnings will expand at a stronger 55% and 73% in FY1/14-15

respectively, as contributions from its 49%-owned FSO Bein Dong and

FPSO Lam Son kick in from 2Q13 and 4Q13 respectively. There is still

upside to our forecasts, for we have yet to future contributions from its

40%-owned PTSC Phu My Port.

Good growth at a great price. Yinson trades at 9x FY1/14 PER, just

5x FY1/15 PER and 0.3x PEG, a more than reasonable proposition for

a small-cap, high-growth stock with the bulk of its earnings locked-in for

the next 5-20 years. Our SOP-based TP of MYR2.54 implies a FY1/14-

15 PER of 6-11x.

Yinson Holdings– Summary Earnings Table FYE Jan (MYR m) 2011A 2012A 2013F 2014F 2015F Revenue 640.8 715.8 672.9 685.0 688.6

EBITDA 40.5 52.9 66.0 100.6 117.3

Recurring Net Profit 18.5 26.6 31.3 48.5 84.0

Recurring Basic EPS (cents) 27.1 35.3 15.6 24.2 41.9

EPS growth (%) 133.2% 30.3% (55.7)% 54.8% 73.4%

DPS (cents) 2.1 2.5 2.5 2.5 2.5

PER 7.9 6.1 13.8 8.9 5.1 EV/EBITDA (x) 8.1 7.2 13.8 8.2 6.2

Div Yield (%) 1.0 1.2 1.2 1.2 1.2

P/BV(x) 1.2 1.0 1.5 1.3 1.1 Net Gearing (%) 148.3 140.2 172.5 123.2 73.8

ROE (%) 16.3% 19.0% 14.4% 16.2% 23.3%

ROA (%) 5.9% 6.0% 4.5% 5.5% 9.6%

Earnings revisions (%) - - - - -

Source: Maybank-IB

Buy (unchanged)


Wong Chew Hann [email protected] (603) 2297 8688

Chong Ooi Ming [email protected] (603) 2297 8676

Stock Information

Description: Vietnam focused O&G solutions and project manager with 4 core operations: FPS projects, marine vessels, land logistics and port operations.

Ticker: YNS MK Shares Issued (m): 200.4 Market Cap (US$ m): 418.7 3-mth Avg Daily Turnover (US$ m): 0.34

ST Index: 1,594.98 Free float (%): 44.0 Major Shareholders: % Lim Han Weng 33.5

Bah Kim Lian 11.6 Liannex Corp 5.7 Lim Han Joeh 5.2

Key Indicators

Net cash / (debt) (MYR m): (221.6) NTA/shr (MYR): 2.10 Net Gearing (x): 1.4

Historical Chart

0.4

0.9

1.4

1.9

Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12

YNS MK Equity

Performance:



Absolute (%) 19.4 28.2 76.1 93.2 62.5

Relative (%) 15.3 26.9 67.2 90.9 58.3

21 June 2012 of 26



FY Jan 2012A 2013F 2014F 2015F FY Jan 2012A 2013F 2014F 2015F

Revenue 715.8 672.9 685.0 688.6 Fixed Assets 150.0 508.5 479.3 444.7

EBITDA 52.9 66.0 100.6 117.3 Other LT Assets 46.2 46.1 49.5 76.3

Depreciation & Amortisation (8.9) (15.1) (32.4) (37.7) Cash/ST Investments 30.4 56.4 79.2 109.7

Operating Profit (EBIT) 44.0 50.8 68.2 79.6 Other Current Assets 269.8 270.1 258.2 246.8

Interest (Exp)/Inc (11.0) (14.1) (18.2) (17.2) Total Assets 496.4 881.2 866.2 877.6

Associates 0.0 0.0 3.4 26.8

One-offs 3.4 0.0 0.0 0.0 ST Debt 179.9 178.1 176.3 176.3

Pre-Tax Profit 32.8 36.7 53.4 89.1 Other Current Liabilities 83.3 42.5 41.7 40.9

Tax (6.5) (3.9) (2.1) (2.1) LT Debt 72.0 357.9 299.0 229.1

Minority Interest (0.3) 1.5 2.9 3.0 Other LT Liabilities 3.4 23.5 23.6 23.8

Net Profit 26.6 31.3 48.5 84.0 Minority Interest (0.3) 1.2 4.1 7.1

Recurring Net Profit 26.6 31.3 48.5 84.0 Shareholders' Equity 158.1 278.0 321.5 400.5

Total Liabilities-Capital 496.4 881.2 866.2 877.6

Revenue Growth % 11.7% (6.0)% 1.8% 0.5%

EBITDA Growth (%) 30.5% 24.6% 52.5% 16.6% Share Capital (m) 75.3 200.4 200.4 200.4

EBIT Growth (%) 33.5% 15.5% 34.3% 16.6% Gross Debt/(Cash) 251.9 536.0 475.3 405.4

Net Profit Growth (%) 43.3% 17.8% 54.8% 73.4% Net Debt/(Cash) 221.6 479.5 396.1 295.7

Recurring Net Profit Growth (%) 43.3% 17.8% 54.8% 73.4% Working Capital 37.0 105.9 119.4 139.4

Tax Rate % 20.0% 10.5% 3.8% 2.3%


FY Jan 2012A 2013F 2014F 2015F FY Jan 2012A 2013F 2014F 2015F

Profit before taxation 32.8 36.7 53.4 89.1 EBITDA Margin % 7.4% 9.8% 14.7% 17.0%

Depreciation 8.9 15.1 32.4 37.7 Op. Profit Margin % 6.1% 7.6% 10.0% 11.6%

Net interest receipts/(payments) (11.0) (14.1) (18.2) (17.2) Net Profit Margin % 3.7% 4.7% 7.1% 12.2%

Working capital change (53.4) (4.2) 11.1 10.5 ROE % 19.0% 14.4% 16.2% 23.3%

Cash tax paid (6.5) (3.9) (2.1) (2.1) ROA % 6.0% 4.5% 5.5% 9.6%

Others (incl'd exceptional items) 22.7 28.2 33.1 7.7 Net Margin Ex. El % 3.7% 4.7% 7.1% 12.2%

Cash flow from operations (6.6) 57.9 109.6 125.7 Dividend Cover (x) 14.1 6.3 9.7 16.8

Capex (3.3) (338.2) (3.0) (3.0) Interest Cover (x) (4.0) (3.6) (3.7) (4.6)

Disposal/(purchase) 4.1 0.0 0.0 0.0 Asset Turnover (x) 1.4 0.8 0.8 0.8

Others 0.0 (76.5) 0.0 0.0 Asset/Debt (x) 2.0 1.6 1.8 2.2

Cash flow from investing 0.8 (414.8) (3.0) (3.0) Debtors Turn (days) 123.1 135.8 130.3 123.4

Debt raised/(repaid) 22.0 284.0 (60.7) (69.9) Creditors Turn (days) 44.2 52.8 51.0 51.0

Equity raised/(repaid) 11.2 116.8 0.0 0.0 Inventory Turn (days) 0.3 0.3 0.3 0.3

Dividends (paid) (1.4) (3.8) (5.0) (5.0) Net Gearing % 140.2 172.5 123.2 73.8

Interest payments (11.0) (14.1) (18.2) (17.2) Debt/ EBITDA (x) 4.8 8.1 4.7 3.5

Others 11.0 0.0 0.0 0.0 Debt/ Market Cap (x) 0.6 1.3 1.1 1.0

Cash flow from financing 31.8 383.0 (83.9) (92.2)

Change in cash 26.0 26.1 22.7 30.6

Sources: Company, Maybank-IB

21 June 2012 of 26


RESEARCH OFFICES REGIONAL

P K BASU Regional Head, Research & Economics

(65) 6432 1821 [email protected]

WONG Chew Hann, CA Acting Regional Head of Institutional Research


THAM Mun Hon Regional Strategist


ONG Seng Yeow Regional Products & Planning (852) 2268 0644 [email protected]

ECONOMICS Suhaimi ILIAS Chief Economist

Singapore | Malaysia (603) 2297 8682 [email protected]

Luz LORENZO Economist

Philippines | Indonesia (63) 2 849 8836 [email protected]

MALAYSIA WONG Chew Hann, CA Head of Research


Strategy Construction & Infrastructure Desmond CH’NG, ACA

(603) 2297 8680 [email protected] Banking - Regional

LIAW Thong Jung

(603) 2297 8688 [email protected] Oil & Gas Automotive

Shipping ONG Chee Ting

(603) 2297 8678 [email protected] Plantations Mohshin AZIZ

(603) 2297 8692 [email protected] Aviation Petrochem

Power YIN Shao Yang, CPA (603) 2297 8916 [email protected] Gaming – Regional

Media Power

WONG Wei Sum, CFA (603) 2297 8679 [email protected] Property & REITs

LEE Yen Ling (603) 2297 8691 [email protected]

Building Materials Manufacturing Technology

LEE Cheng Hooi Head of Retail

[email protected] Technicals

HONG KONG / CHINA Edward FUNG Head of Research


Construction Ivan CHEUNG

(852) 2268 0634 [email protected] Property Industrial

Ivan LI (852) 2268 0641 [email protected] Banking & Finance

Jacqueline KO (852) 2268 0633 [email protected] Consumer Staples

Andy POON (852) 2268 0645 [email protected] Telecom & equipment

Samantha KWONG (852) 2268 0640 [email protected] Consumer Discretionaries

Alex YEUNG (852) 2268 0636 [email protected]

Industrial Catherine CHAN (852) 2268 0631 [email protected]

Cement Anita HWANG, CFA | Jacky WONG, CFA [email protected] | [email protected]

(852) 2268 0142 | (852) 2268 0107 Special Situations Quants

INDIA Jigar SHAH Head of Research

(91) 22 6623 2601 [email protected] Oil & Gas

Automobile Cement Anubhav GUPTA

(91) 22 6623 2605 [email protected] Metal & Mining Capital goods

Property Haripreet BATRA

(91) 226623 2606 [email protected] Software Media

Ganesh RAM (91) 226623 2607 [email protected] Telecom

Contractor Darpin SHAH (91) 226623 2610 [email protected]

Banking & Financial Services Gagan KWATRA (91 )226623 2612 [email protected]

Small Cap

SINGAPORE Stephanie WONG Head of Research


Strategy Small & Mid Caps Gregory YAP

(65) 6432 1450 [email protected] Technology & Manufacturing Telcos - Regional

Wilson LIEW (65) 6432 1454 [email protected] Hotel & Resort

Property & Construction James KOH

(65) 6432 1431 [email protected] Logistics Resources

Consumer Small & Mid Caps YEAK Chee Keong, CFA

(65) 6433 5730 [email protected] Healthcare Offshore & Marine

Alison FOK (65) 6433 5745 [email protected] Services

S-chips Bernard CHIN (65) 6433 5726 [email protected]

Transport (Land, Shipping & Aviation) ONG Kian Lin

(65) 6432 1470 [email protected] REITs / Property WeiBin

(65) 6432 1455 [email protected] S-chips Small & Mid Caps

INDONESIA Katarina SETIAWAN Head of Research

(62) 21 2557 1125 [email protected] Consumer

Strategy Telcos Lucky ARIESANDI, CFA

(62) 21 2557 1127 [email protected] Base metals Coal

Oil & Gas Rahmi MARINA (62) 21 2557 1128 [email protected]

Banking Multifinance Pandu ANUGRAH

(62) 21 2557 1137 [email protected] Auto

Heavy equipment Plantation Toll road

Adi N. WICAKSONO (62) 21 2557 1130 [email protected] Generalist

Anthony YUNUS (62) 21 2557 1134 [email protected] Cement

Infrastructure Property Arwani PRANADJAYA

(62) 21 2557 1129 [email protected] Technicals

PHILIPPINES Luz LORENZO Head of Research

+63 2 849 8836 [email protected] Strategy Laura DY-LIACCO

(63) 2 849 8840 [email protected] Utilities

Conglomerates Telcos Lovell SARREAL

(63) 2 849 8841 [email protected] Consumer Media

Cement Mining Kenneth NERECINA

(63) 2 849 8839 [email protected] Conglomerates Property

Ports/ Logistics Katherine TAN (63) 2 849 8843 [email protected]

Banks Construction

Ramon ADVIENTO (63) 2 849 8842 [email protected]

THAILAND Mayuree CHOWVIKRAN Head of Research

(66) 2658 6300 ext 1440 [email protected] Strategy

Maria BRENDA SANCHEZ LAPIZ Co-Head of Research

Dir (66) 2257 0250 | (66) 2658 6300 ext 1399

[email protected]

Andrew STOTZ Strategist

(66) 2658 6300 ext 5091 [email protected]

Suttatip PEERASUB

(66) 2658 6300 ext 1430 [email protected] Media Commerce

Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 [email protected] Energy

Petrochem Termporn TANTIVIVAT (66) 2658 6300 ext 1520 [email protected]

Property Woraphon WIROONSRI (66) 2658 6300 ext 1560 [email protected]

Banking & Finance Jaroonpan WATTANAWONG

(66) 2658 6300 ext 1404 [email protected] Transportation Small cap.

Suchot THIRAWANNARAT (66) 2658 6300 ext 1550 [email protected] Automotive

Construction Materials Soft commodity

VIETNAM Michael KOKALARI, CFA Head of Research

+84 838 38 66 47 [email protected]

Strategy Nguyen Thi Ngan Tuyen +84 844 55 58 88 x 8081 [email protected]

Food and Beverage Oil and Gas Ngo Bich Van

+84 844 55 58 88 x 8084 [email protected] Banking Nguyen Quang Duy

+84 844 55 58 88 x 8082 [email protected] Rubber Dang Thi Kim Thoa

+84 844 55 58 88 x 8083 [email protected] Consumer Nguyen Trung Hoa

+84 844 55 58 88 x 8088 [email protected] Steel

Sugar Macro

21 June 2012 of 26


Mining

21 June 2012 of 26


APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS

This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security‟s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuat ions apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction‟s stock exchange in the equity analysis. Accordingly, investors‟ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.

The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.

This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information current ly available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrenc e of unanticipated events.

MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. MKE may, to the extent permitted by law, act upon or use the information presented herein, or the research or analysis on which they are based, before the material is published. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report.

This report is prepared for the use of MKE‟s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect.

This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report.

Malaysia

Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.

Singapore

This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of th is report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.

Thailand

The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) does not confirm nor certify the accuracy of such survey result.

Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the pri or written permission of MBKET. MBKET accepts no liability whatsoever for the actions of third parties in this respect.

US

This research report prepared by MKE is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investment s to you under relevant legislation and regulations.

UK

This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Services Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

21 June 2012 of 26


DISCLOSURES

Legal Entities Disclosures

Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938-H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This material is issued and distributed in Singapore by Maybank KERPL (Co. Reg No 197201256N) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Kim Eng Securities (“PTKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the BAPEPAM LK. Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission.Philippines:MATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Kim Eng Vietnam Securities Company (“KEVS”) (License Number: 71/UBCK-GP) is licensed under the StateSecuritiesCommission of Vietnam.Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Lim ited (Reg No: INF/INB 231452435) and the Bombay Stock Exchange (Reg. No. INF/INB 011452431) and is regulated by Securities and Exchange Board of India. KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.

Disclosure of Interest

Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies.

Singapore: As of 21 June 2012, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.

Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.

Hong Kong: KESHK may have financial interests in relation to an issuer or a new listing applicant referred to as defined by the requirements under Paragraph 16.5(a) of the Hong Kong Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

As of 21 June 2012, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.

MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment.

OTHERS

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analyst‟s personal views about any and all of the subject securities or issuers; and no part of the research analyst‟s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.

Reminder

Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.

No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.

Definition of Ratings

Maybank Kim Eng Research uses the following rating system:

BUY Total return is expected to be above 15% in the next 12 months

HOLD Total return is expected to be between -15% to +15% in the next 12 months

SELL Total return is expected to be below -15% in the next 12 months

Applicability of Ratings

The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only

applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings

as we do not actively follow developments in these companies.

Some common terms abbreviated in this report (where they appear):

Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings

BV = Book Value FV = Fair Value PEG = PE Ratio To Growth

CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio

Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter

CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset

DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share

NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds

EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital

EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year

EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date

EV = Enterprise Value PBT = Profit Before Tax

21 June 2012 of 26


Malaysia

Maybank Investment Bank Berhad (A Participating Organisation of Bursa Malaysia Securities Berhad)

33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur Tel: (603) 2059 1888;

Fax: (603) 2078 4194

Singapore

Maybank Kim Eng Securities Pte Ltd Maybank Kim Eng Research Pte Ltd 9 Temasek Boulevard

#39-00 Suntec Tower 2 Singapore 038989 Tel: (65) 6336 9090

Fax: (65) 6339 6003

London

Maybank Kim Eng Securities (London) Ltd 6/F, 20 St. Dunstan’s Hill

London EC3R 8HY, UK Tel: (44) 20 7621 9298 Dealers’ Tel: (44) 20 7626 2828

Fax: (44) 20 7283 6674

New York

Maybank Kim Eng Securities USA Inc 777 Third Avenue, 21st Floor

New York, NY 10017, U.S.A. Tel: (212) 688 8886 Fax: (212) 688 3500

Stockbroking Business:

Level 8, Tower C, Dataran Maybank, No.1, Jalan Maarof 59000 Kuala Lumpur Tel: (603) 2297 8888

Fax: (603) 2282 5136

Hong Kong

Kim Eng Securities (HK) Ltd

Level 30, Three Pacific Place, 1 Queen’s Road East, Hong Kong

Tel: (852) 2268 0800 Fax: (852) 2877 0104

Indonesia

PT Kim Eng Securities

Plaza Bapindo Citibank Tower 17th Floor Jl Jend. Sudirman Kav. 54-55 Jakarta 12190, Indonesia

Tel: (62) 21 2557 1188 Fax: (62) 21 2557 1189

India

Kim Eng Securities India Pvt Ltd

2nd Floor, The International 16, Maharishi Karve Road, Churchgate Station, Mumbai City - 400 020, India

Tel: (91).22.6623.2600 Fax: (91).22.6623.2604

Philippines

Maybank ATR Kim Eng Securities Inc.

17/F, Tower One & Exchange Plaza Ayala Triangle, Ayala Avenue Makati City, Philippines 1200

Tel: (63) 2 849 8888 Fax: (63) 2 848 5738

Thailand

Maybank Kim Eng Securities (Thailand) Public Company

Limited 999/9 The Offices at Central World, 20th - 21st Floor, Rama 1 Road Pathumwan,

Bangkok 10330, Thailand Tel: (66) 2 658 6817 (sales) Tel: (66) 2 658 6801 (research)

Vietnam

In association with

Kim Eng Vietnam Securities Company 1st Floor, 255 Tran Hung Dao St.

District 1 Ho Chi Minh City, Vietnam Tel : (84) 838 38 66 36

Fax : (84) 838 38 66 39

Saudi Arabia

In association with

Anfaal Capital Villa 47, Tujjar Jeddah Prince Mohammed bin Abdulaziz

Street P.O. Box 126575 Jeddah 21352 Tel: (966) 2 6068686

Fax: (966) 26068787

South Asia Sales Trading

Connie TAN

[email protected] Tel: (65) 6333 5775 US Toll Free: 1 866 406 7447

North Asia Sales Trading

Eddie LAU

[email protected] Tel: (852) 2268 0800 US Toll Free: 1 866 598 2267

www.maybank-ke.com | www.kimengresearch.com.sg

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