According to its Chief Operating Officer, Benalec Holdings (BHB) expects to obtain  approvals  for  the  DEIA  for  its  3,485  acre  Tanjung  Piai  Integrated Petroleum  &  petroleum  Hub  and  Maritime  Industrial  Park  in  1Q15.  He added  the  environment  impact  study  on  1,760  acre  Pengerang  land reclamation concession is still on-going.

Meanwhile, it was also reported that a minority shareholder questioned the remuneration package of BHB’s Group Managing Director Dato’ Leaw Seng Hai. He claimed that the GMD’s package of RM7.5m-RM8.0m in FY06/14 was too high compared to the group’s net profit of RM7.2m. (Source: The Edge Financial Daily)

Approval of the DEIA will be major positive news for the group. Work on the massive  Tanjung  Piai  concession  can  then  commence.  We  estimate  that the Tanjung Piai and Pengerang will boost BHB’s order book by ~RM15bn and  net  profit  by  RM1.2bn  over  the  next  10-15  year.  With  regard  to  the remuneration  package  for  the  GMD,  the  management  said  the  GMD  has worked  tirelessly  for  the  group,  including  resolving  the  recent  boardroom tussle and securing the  Johor concessions. He was also  the GMD in FY12 and FY13 when the group recorded net profits of RM82.7m and RM56.6m respectively.

Maintain BUY rating with a TP of RM0.68 based on 10x FY15 EPS.

Source: Affin Hwang Capital Research - 23 Dec 2014