Sunday, September 30, 2012
“We need highly trained people in harvesting. All these while we are depending on Indonesian workers, which accounts for 80 per cent of the total workers,” said Sarawak Plantation Bhd’s (Sarawak Plantations) group managing director, Datuk Hamden Ahmad yesterday.
He said there had been initiatives to encourage more local workers to work in the sector, including giving more incentives and providing better working conditions.
“The Sarawak Oil Palm Plantation Owners Association is also trying to persuade the government to approve the ratio of 6 hectare per 1 worker, instead of the current 8:1 ratio,” he disclosed, adding that the labour shortage in the harvesting process directly affects the fresh fruit production.
Sarawak Plantations has 30,000 hectares in production currently, with plans to expand more in the future.
“We’re targetting to have an additional of 5,000 hectares every year. This is part of our new development plan. This year alone we have cleared 7,500 hectares including in Mukah and in Tulai,” he said.
Monday, September 24, 2012
Local players ready for deepwater O&G fields with Petronas
by Venu Puthankattil. Borneo Post November 1, 2011, Tuesday
The national oil corporation stated last week that there was no change in its licensing policy related to companies engaged in Malaysia’s upstream O&G industry in response to media reports speculating that Petronas would do away with the policy.
Specifically, under the Petroleum Regulation 1974, both local and foreign companies wishing to commence or even carry out any business or services related to Malaysia’s O&G upstream operations must apply for a licence from Petronas.
OSK Research Sdn Bhd analyst Jason Yap told The Borneo Post, “We note that Petronas has embarked on a long term plan to nurture the local O&G service providers – with the first few being Kencana Petroleum Bhd (Kencana), SapuraCrest Petroleum Bhd, and Dialog Group Bhd (Dialog) – which have been awarded marginal oilfields to expose these companies to upstream O&G activities.
“Secondly, we understand that most of the local O&G service providers currently have spare capacity as O&G activities have slowed compared with before the global economic recession in 2008 when their capacity was mostly tailored to local needs,” Yap added.
Noting this spare capacity, the analyst said it did not make economic sense for Petronas to obtain resources from non-local O&G services providers whose capacity was mostly built to meet the requirements of their respective countries or regions of operation.
“Finally, this licensing requirement does not prevent foreign companies from participating in Malaysia’s O&G sector as what is required is a partnership with a local licence holder,” he stressed.
“In fact, such participation facilitates the transfer of technology and helps enhance the competence of the local companies while at the same time allowing the foreign companies to benefit from the development of the country’s resources,” Yap pointed out.
With an improving global economic outlook and crude oil price having gone back to around US$90 per barrel, Yap believed that O&G activities would gradually pick up, which would then benefit all O&G service providers through better utilisation rates and higher sales per unit or services per hour rates.
On the local front, he expected the industry to see more marginal oilfield developments as well as the increasing need for brownfield services to boost O&G production while waiting for the commencement of deepwater activities on a large scale after pre-development preparations would be completed.
“We gather that the ratio between shallow waters and deepwater O&G production is still at 70:30 but over time, the deepwater portion will pick up after all the easy O&G finds are depleted.
“This may not be so soon since there are still many untapped areas. Also, with better technology now, this opens up opportunity to areas which are shallow, but not previously tapped before.
“Hence, we think Petronas is now preparing local O&G supporting services providers for marginal oilfield (shallow water) developments first before embarking into the more challenging terrain (deepwater),” Yap opined.
With regards to capital expansion to venture into deep fields, he stated that most of the local players were capable of providing support services. However, to be the main contractor for such fields, there might still be some learning curve challenges for them.
His crude oil price forecast for financial year 2011 (FY11) was US$85 to US$95 and US$80 to US$90 for FY12. However, this was with the expectation that the global economy would slow down. In the event that it did not do so, he would revise the oil prices for FY12.
Yap remained positive on the O&G sector, stating OSK Research’s top picks as Kencana with a fair value pegging at RM3.17 per share and Dialog with a fair value of RM3.66 per share.
Tuesday, September 18, 2012
Condominium demand to pick up in Sarawak
In an interview with The Borneo Post, managing director of Silverdrum Sdn Bhd, Alan Sim highlighted that demand for condominiums, in particular the urban areas in Kuching had intensified as preference for both security and convenience grew.
“I think Kuching has come to a level where condominium living is picking up. People are starting to acknowledge the advantages of these residences in terms of security, convenience and the wide-ranging facilities that they offer.
“If we are looking at the rate of development of condominiums, it is definitely gaining momentum as developers are able to build more units on a piece of land.
“If we talk about building high-end semi-detached units for example, the density is only six units an acre.
“This is different for condominiums whereby you develop it upwards and from what I’ve seen, developers are keen on tapping this market, leveraging on the heightened concerns for safety,” he explained.
According to a report released by the Sarawak Housing Controller: 10 SHCC meeting on February 24 this year, the number of condominium units have picked up from 140 units in 2009 to 482 units in 2010.
Apartments on the other hand had also seen an increase from 299 units to 466 units from 2009 to 2010.
Four-storey apartment as well witnessed a growth of supply as the report revealed a growth from 64 units to 192 units from 2009 to 2010.
Commenting on this figure was secretary general of Sarawak Housing and Real Estate Developer Association (Sheda) Sim Kiang Chiok who opined that developers were eager to foray into the gated and guarded community development concepts (Gacos) propelled partly by the increase in transportation cost.
“Apartments and condominiums strata development are catching up, particularly here in Kuching. These are generally gated and guarded projects sited at fairly prime locations and are available from the medium end apartment at RM250,000 to RM950,000 for the upper end segments.
“If you drive around Kuching, the ratio of high-rise residences as compared with landed properties is still low but it is starting to gain pace. A lot of the younger generation and the educated elderly prefer these kinds of homes because they find they do not have to deal with the gardens and security.
“If we’re talking about the rate of increase in the next few years, it will be to a certain extent affected by the rise in petrol prices. As such, condominiums only work if the location is situated in prime area. The furthest location we have observed so far where demand for high-rise is strong is within the Batu Kawah vicinity, roughly six to seven mile radius from the city centre,” he observed.
Despite market’s observation that condominium living would be a way of life for most home-buyers in the longer term, Sim underscored that landed properties would still be a primary choice for many residents.
“Property developers in the residential sector are looking for good take-up rates. Traditionally, terrace houses and semi-detached are still the popular choice in the market. Kuching is still moving at a slower pace and we are still more laid-back.
“Although property developers seek good returns and higher margins, the development of condominium varies from the conventional landed properties. It is a different lifestyle as you have to put up with communal facilities, elevators, basement car parks and management,” he elaborated.
Adding to this was general manager of IJM Land Bhd (IJM Land), Chong Ching Foong who pointed out that as the units go higher, it became costlier and more complex for the developers.
“One can actually count the number of condominiums in Kuching and that of Sarawak, simply because it is costlier to build one. The cost escalates when we go higher, and at the same time, the developer needs to be financially strong and experienced.
“So there is a misconception that building a higher unit yields higher margins. For example, for condominiums, cost of construction itself is higher. If we were to compare the pricing between East Malaysia and West Malaysia, we simply cannot charge the kind of niche pricing charged by the property boys in the Peninsular because a majority of the population will not be able to afford it.
“When IJM Land first set up its Kuching branch some years ago, we were one of the pioneers in condominium development in the state. Until today, I still don’t see many similar players around. With that, I don’t foresee a rapid increase in this particular sector in the next five years. But, this scenario can change in the long run,” he reckoned.
Wednesday, September 12, 2012
Posted on November 12, 2011, Saturday
Most of the bigger players in Indonesia had experienced the peak of their plantations in 2007 and this, according to market observers, would help beef up the palm oil’s volume going forward.
“These newly mature areas will continue to accelerate their production growth for the next four to five years. As such, we believe supply will trend upwards as we move into the new year.
“We suspect Indonesia’s palm oil production to peak around 2015 given the historical planting and that most companies have not been able to meet their planting target since 2008. This has been made worse by the moratorium on new planting put in place this year,” said OSK Research Sdn Bhd (OSK Research) in yesterday’s note.
Of all global edible oils, the only major oil that had seen an accelerated increase in output was palm oil, which growth was mainly derived from Indonesia.
Hence, the research house affirmed that should Indonesia’s palm oil production hit a peak, global edible oil supply would follow suit with a peak, where this would consequently have very bullish price implications.
“While it is too early to position for the next upcycle, we believe investors should accumulate good growth stocks which will provide the alpha as these stocks tend to be illiquid,” OSK Research added.
Groups like First Resources Ltd, Sarawak Oil Palms Bhd and Kencana Agri Ltd were amongst the research firm’s top picks as they had age profile capable of driving long-term output growth.
According to Malaysia Palm Oil Board (MPOB), the country had produced 1.908 million tonnes of palm oil in October this year, higher by 2.1 per cent or 39,2000 tonnes compared with the previous month. The month’s volume was the country’s second highest monthly production, after October 2009.
Much of the growth came from East Malaysia, whereby Sarawak and Sabah’s production rose by 3.4 per cent and 3.9 per cent month-on-month (m-o-m), respectively. Peninsular Malaysia, on the other hand, saw a marginal increase of 0.8 per cent in production.
On a year-on-year (y-o-y) basis, national yield swelled 16.6 per cent, propelling year-to-date (YTD) production to 15,790 million tonnes, 10.4 per cent stronger than over the same period last year.
Meanwhile, analysts from ECM Libra Research Sdn Bhd (ECM Libra Research) expected that the full-year production would fall within 18 million metric tonne (mt) to 18.5 million mt, breaking the 2009 high of 17.7 million mt.
On the other hand, RHB Research Institute Sdn Bhd (RHB Research) took a more conservative view on the matter despite optimism expressed on future outputs.
“We believe the continued strength in production numbers in October may indicate that monthly production in the country may not necessarily grow from hereon for the rest of the year,” it said.
The tropical Pacific Ocean has been in the early stages of a late-forming La Nina event. Weather models suggested that a further strengthening of the event was likely until mid-first quarter of next year. Key atmospheric signals such as trade winds, cloud and the Southern Oscillation Index (SOI) had also exceeded La Niña thresholds of plus eight.
“If the SOI is sustained above these levels for more than three months, it would indicate a confirmation of La Nina. However, we reiterate that this time, if La Nina does form, it is likely to be weaker than the strong 2010 to 2011 event,” opined RHB Research.
Moving ahead, national exports also experienced a surge of 19 per cent, or 294,400 tonnes m-o-m, after two consecutive monthly declines. Pakistan contributed to the stronger exports, boosting its monthly purchase by 88,000 tonnes. This was followed by Italy (63,100 tonnes), Bangladesh (13,000 tonnes) and India (8,100 tonnes).
Exports climbed 26 per cent on a y-o-y basis on the back of higher Chinese and Indian purchases. Current YTD exports registered a total of 14,723 million tonnes, which was 6.2 per cent stronger than the previous year.
The high export numbers as opined by Kenanga Research, the research arm of Kenanga Investment Bank Bhd, could be due to stock-up activities then ahead of preparation for Hari Raya Haji celebration in Pakistan. This along with the declining domestic production of rapeseed in Europe helped to escalate the demand in palm oil products.
Taking into account of the major festivities that spurred the demand for palm oil, Kenanga Research was somewhat downbeat of the current period as there would be less celebrated events this quarter.
“In the absence of major festivals going forward in the fourth quarter of this year, palm oil demand may decline within the short-term span. In addition, crude palm oil (CPO) demand usually falls in the northern hemisphere during winter as consumers switch to soybean oil, which does not solidify in colder temperatures,” it said.
Following this line of observation was OSK Research, who believed that demand would not see much excitement due to uncertain economic condition.
“YTD China’s edible oil import has fallen by 7.9 per cent while India’s by seven per cent. India’s palm oil purchase bucked the trend with a 3.1 per cent increase indicating a switch to palm oil due to the sizeable discount to soybean oil.
“However, the spread has narrowed from more than US$250 just a month ago to less than US$150 now with the successful soybean harvest in the US. Should the spread narrow further, India’s buying of palm oil will certainly weaken,” said OSK Research.
Thursday, September 6, 2012