THE BUZZ
We understand from our sources that Chevron, together with its co-partners ExxonMobil and Shell, has opened for bidding second-tier modular construction works since early October 2009. The Gorgon LNG project would require some 50,000 tonnes of pre-assembled racks to be built in modules and transported to Barrow Island for assembly of the LNG plant. To date, tenders for about 10,000 tonnes of these racks have been opened for bidding.
News to flow in progressively. The Gorgon project has been very active under our radar as there are progressively many new developments on the project. On the local front, we think the pipe coating award should be the first to materialize sometime this month (with Wah Seong as the beneficiary), followed by those for LNG process equipment in December (with KNM as the beneficiary, especially through its subsidiary, KPL Australia Ltd) and finally the fabricators, for which the outcome will be known sometime in January 2010 (with Kencana and Ramunia being the winners). Maintain Overweight. The beneficiaries of the Gorgon project include Wah Seong (Buy, TP: RM3.24 based on a PER of 14x FY10 EPS) and KNM (Buy, TP: RM1.27 based on PER of
12x FY10 EPS) and Kencana (Buy, TP: RM2.69 based on PER of 14x FY11 EPS).
