Posted by taciturn > 2015-02-11 19:45 | Report Abuse

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1874449

2Q14 results announced.

Revenue: RM60.23m
Net Profit: RM3.46m

Will post comments and analysis after I've had time to go through the notes.

Posted by Simon Lau > 2015-02-11 20:55 | Report Abuse

why they only able to claim melaka land for roughly 10 acres for there months????anyone thank u.

Posted by ykloh > 2015-02-11 21:42 | Report Abuse

Bursa Announcement : Leaw Seng Hai has been changed being the MD to 'Others'. So what is he now in Benalec.

Posted by zero > 2015-02-11 21:56 | Report Abuse

my findings on this Q results: good that they're paying their debt... :P

Posted by taciturn > 2015-02-11 22:04 | Report Abuse

ykloh: MD to Group MD/CEO.

Posted by CHONG Kong Hui > 2015-02-12 00:06 | Report Abuse

Really???

Date of change 11/02/2015
Name Dato' Leaw Seng Hai
Age 52
Nationality Malaysian
Type of change Redesignation
Previous Position Managing Director
New Position Others
Directorate Executive

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1874417

Posted by taciturn > 2015-02-12 00:18 | Report Abuse

@Chong Kong Hui: If you'd take the time to read the bottom of that link you posted, you'll find this:

"Remarks :
Gender: Male

The Board of Directors had on 11 February 2015 approved the redesignation of Dato' Leaw Seng Hai as Group Managing Director/Chief Executive Officer with effect from 11 February 2015.
"

Posted by Simon Lau > 2015-02-12 08:41 | Report Abuse

why they only able to claim melaka land for roughly 12 acres for three months????anyone thank u

Posted by where > 2015-02-13 09:30 | Report Abuse

lack of demand so they stop reclaiming it aggressively and very likely due to cash flow problem. Cannot sell and if reclaim, they need to pay the cost

Posted by where > 2015-02-13 09:33 | Report Abuse

The net cash in only at RM11 million which means that they can sustain only for 3 more months. If bond issues failed, theoretically, we can see this company falls under PN17

Posted by where > 2015-02-13 09:36 | Report Abuse

This CNY, i will go to Tanjung Piai to catch some photos to see whether any reclamation works since the COO Desmond Boey said they will commence reclamation works on early February

Posted by Simon Lau > 2015-02-13 09:53 | Report Abuse

the cash flow is really the problem bc of their business nature (claim first , sell later so the cash stuck for a long time even their margin is good)

Posted by taciturn > 2015-02-13 10:40 | Report Abuse

Haven't had time to draft a proper posting on the latest quarterly results.

Let me clarify one point though for all rational investors.

Benalec is a profitable company. It is not a loss making company. Its retained profits exceeds its paid up capital which makes PN17 extremely unlikely to happen.

PN17 is based off losses and accumulated losses.

A failure of the bond issue (which is nowhere near to happening as far as I know) has absolutely _nothing_ to do with PN17.

[/sarcasm] Only a jenius would claim that it is.

Then again, one jenius still believe that Tanjung Piai's DEIA approval will only occur after March. And that the DEIA approval _HAS_ to be announced by Najib. [/sarcasm]

Posted by Simon Lau > 2015-02-13 10:50 | Report Abuse

taciturn , any take on the quarter report tq

Posted by taciturn > 2015-02-13 11:18 | Report Abuse

simon lau: Will do a proper write up next week. Right now a bit rushed because of CNY round the corner.

Also your question on the amount of land reclaimed in 3 months is apt and pertinent. Will post when I find out more.

Posted by Simon Lau > 2015-02-13 11:26 | Report Abuse

thank you , taciturn looking forward to hear from u. by the way AMMB mentioned that the company kick start the bonn siew project hopefully will bring in some cash for the company.

Posted by where > 2015-02-13 15:04 | Report Abuse

Taciturn - why 1MDB MOU yet to sign?

Posted by jenabchen123 > 2015-02-13 15:44 | Report Abuse

Beli cepat.... Kasi Kukuman angry..........

Posted by happyvic > 2015-02-13 16:25 | Report Abuse

kukubird kantoi as the true spinner... straight away diam so long...hahaha

Posted by shaz1963 > 2015-02-16 23:52 | Report Abuse

Bursa Announcements

Date: 16 February 2015

Additional Listing Announcement


1. Details of Corporate Proposal

Whether the corporate proposal involves the issuance of new type
and new class of securities? No
Types of corporate proposal ESOS
Details of corporate proposal Share Issuance Scheme
No. of shares issued under this corporate proposal 203,000
Issue price per share ($$) MYR 0.790
Par Value ($$) MYR 0.250
Latest issued and paid up share capital after the above corporate proposal in the following

Units 811,802,500
Currency MYR 202,950,625.000
Listing Date 17/02/2015

Posted by ymtan > 2015-02-17 17:11 | Report Abuse

Wasai. Sell down 4c.. Zzzz

Posted by shaz1963 > 2015-02-18 08:01 | Report Abuse

Bursa Announcements

Date: 17 February 2015

Notice of Shares Buy Back - Immediate Announcement


Date of buy back 17/02/2015
Description of shares purchased Ordinary Shares of RM0.25 each
Currency Malaysian Ringgit (MYR)
Total number of shares purchased (units) 10,000
Minimum price paid for each share purchased ($$) 0.845
Maximum price paid for each share purchased ($$) 0.845
Total consideration paid ($$) 8,512.24
Number of shares purchased retained in treasury (units) 10,000
Number of shares purchased which are proposed to be cancelled (units) 0
Cumulative net outstanding treasury shares as at to-date (units) 12,665,400
Adjusted issued capital after cancellation
(no. of shares) (units) 0
Total number of shares purchased and/or held as treasury shares against the total number of outstanding shares of the listed issuer (%) 1.56

Posted by cjterk > 2015-02-18 10:08 | Report Abuse

Hi All...this share still can hold??

Posted by happyvic > 2015-02-18 10:19 | Report Abuse

Totally up to you. But I am still holding. I'm up by 4 cents average but I believe in a few months time I could be up more. But I also am not in dire need of cash. So my advise, hold if you don't need the cash anytime soon.

Posted by taciturn > 2015-02-23 11:40 | Report Abuse

Simon Lau: The answer to your question is listed below under Item 3.

Benalec's 2QFY15 results (Sep-Dec 2014).

[http://www.bursamalaysia.com/market/listed-companies/company-announcements/1874449]

Overall it was not an inspiring period, revenue was decent but net profit was very small. This again highlights the fact that Benalec's earnings are very lumpy by nature. I am not going to do a detailed analysis of the latest quarter. Suffice to say that I do not see anything alarming.

I would like to note that I am happy that the past two quarterly results have come out earlier than expected. 1QFY15 was released on 18 Nov (versus 26 Nov for 1QFY14), while 2QFY15 was released on 11 Feb (versus 28 Feb for 2QFY14). I am hoping that this trend improves and we might see quarterly results being released within a month of the closing of that financial period.

As any serious fundamental investor knows, quarterly results are the essential bread and butter for such analysis. Also, having the results released earlier means that you don't join the 95% herd of listed companies on Bursa who release their results only within the last couple of days before their deadline. This makes it very difficult for a single company to stand out during that period.

After the release of their latest quarterly results, I had the pleasure of having a discussion with the management of the company where I received quite a number of answers to my queries.

I have tried to order what I learned as best as I can.

Terms to note before you read my analysis/views (I am stressing this here since some readers do not seem to understand this):
FY - Financial Year. Benalec's FY is from July 1 - June 30.
CY - Calendar Year
1HFY - First half of the FY, July 1 - Dec 31
2HFY - Second half of the FY, Jan 1 - June 30

Note that this series of postings was written during the CNY period, and I have used the pre-CNY closing price (83.5 sen) as reference for any calculations.

1. Lumpy earnings
I need to go into a bit of detail here, so bear with me if your eyes start to droop as you read this.

What does it mean by lumpy earnings? It usually means that revenue is booked in bulk in one go.

To put it in comparison, a company with progress earnings (for example, a general contractor) would usually bill their clients on a monthly basis. A general contractor which does an average of 5% of the whole job every month would book 5% of their revenue each time they bill their client.

If the job is RM100m, 20% net profit, 20 month period, after 3 months (every quarter), the company would have booked RM15m in revenue and RM3m in profit. (This is a rough example)

Now in Benalec's case, here is an example of lumpy earnings [Note that this is just a theoretical example]. Let us assume a piece of land is sold on 31 Dec 2013 at RM60m with a 25% net profit.

The buyer pays 10% down as a deposit.

The land is partially reclaimed that will be fully reclaimed in 3 months time (31 March 2014). Once done, the land title application will be made to the land office. 6 months is usually needed for land title applications (30 Sep 2014).

Once the land title is issued, the title is delivered to the buyer's solicitors. The standard sale and purchase agreement (SPA) by Benalec states that the buyer is given 3 months from the title delivery date to pay the balance of 90% (31 Dec 2014). In the event the buyer does not pay up in time, they get an automatic 1 month extension (31 Jan 2015). However, during this 1 month extension they have to pay interest at the rate of 8% p.a on the balance.

If the buyer does not pay up, it is considered a default. Benalec keeps the 10% deposit and they part ways. This has happened before - buyers Highbond Capital and Gigayear Revenue defaulted.

[http://www.bursamalaysia.com/market/listed-companies/company-announcements/1555185

See item 10.1.a for details]

Of course as a caveat, if Benalec and the buyer so choose, they can come to an agreement (strictly voluntary) for any further extension.

Now when does Benalec book this RM60m as revenue? It is only booked when the final payment is made.

In other words, you have a land sale on 31 Dec 2013 (2QFY14). The 10% deposit is considered a liability (Deferred Revenue in the Balance Sheet) and is not booked as revenue during that period. Assuming that the buyer pays up after the 3+1 month period, 100% of the revenue is booked on 31 Jan 2015 (2QF15). In other words, such a sale takes over 1 full year before it is booked as revenue.

Why is it done this way? To comply with general accounting standards, and to keep the auditors happy. The auditors take the view that a default is always possible, and you only walk away with the 10% deposit. They do not want you to book the whole revenue and then have to reverse it upon a default.

Also not all buyers pay up at the very last minute. Some may choose to pay within the 3 month period (to avoid the interest on the 4th month).

Posted by taciturn > 2015-02-23 11:41 | Report Abuse

2. Earnings for FY15
There are still 6 months of accounting to be booked for this financial year.

Revenue and Net Profit results and estimates by research houses

1HFY15 (Actual) - RM 108.1m / RM15.5m

FY15E
Affin Hwang - RM250m / RM54.7m
AM Research - RM307.3m / RM47.9m
BIMB - RM232.4m / RM29.7m
CIMB - RM215.5m / RM54.58m
Kenanga - RM247.5m / 65m

Based off my points in Item 1 above, I believe that for the 2HFY15, Benalec will not be booking spectacular earnings. There is one land deal to be booked in Q3FY15 (Faithview Supreme / 29.54 acres @ RM51.47m) as stated in the latest notes to the account (item 22.1).

The bursa announcement for the sale stated an expected net profit of RM15.5m for this deal.

[http://www.bursamalaysia.com/market/listed-companies/company-announcements/1445317]

However, if we annualise the company's administrative and other operating expenses for the other 6 months of the year we come to a total of about RM15m, thus eliminating almost the entire net profit from this deal.

Granted there may be other land sales I am unaware of to be recognised during this 6 month period (these are sales that are small enough that no announcement to bursa was made) but I believe such gains will be small and offset against

Benalec's other business segments (Vessel Chartering and Ship Building) which at the moment are value added cost centres. (Intangible benefits to the company, but loss making on paper)

I have to highlight that work on the Ultra Green contract has started and should also be imputed into earnings for 2HFY15. (see below, Item 4. Ultra Green)

I recognise that there is some assumption that part of the SPA to Ultra Harmony should be recognised within FY15 but I am going with the conservative view that this is unlikely to happen (more on this below). I do believe that first two stages are to be booked around the same time, although whether they make the cut for the period of FY15 is still up in the air.

So for the moment, I disagree with all 5 research house estimates as I do not believe any of Ultra Harmony's stages will be booked in FY15. This is my personal opinion, and should not be viewed as gospel truth.


Strictly speaking, from a PER view, Benalec's current share price would be considered overvalued for FY15 if this is so.

However, do carry on reading my postings if you would please, to take into account the prospects as well as FY16 expectations.

Posted by taciturn > 2015-02-23 11:41 | Report Abuse

3. Ultra Harmony
Benalec signed an SPA to sell 128.52 acres to Ultra Harmony on 20 March 2014.

[http://www.bursamalaysia.com/market/listed-companies/company-announcements/1571525]

Of which a circular on the deal was announced on 10 June 2014

[http://www.bursamalaysia.com/market/listed-companies/company-announcements/1652405]


Remember my posting above about lumpy earnings (Item 1)? If you had not fallen asleep whilst reading it, I would point out here that the SPA with Ultra Harmony was to sell the land in 4 stages of roughly 30 odd acres each.

What does this mean? It means 4 separate land title deliveries, and 4 separate payment periods. Meaning that once a stage has been paid in full, it is recognised and booked as revenue and earnings.

Benalec did this because of the large cash flow requirements for the deal, and it would have been stretched to its limit if it were to be paid only at the end of 100% completion (not just in terms of cash flow, but also booking of revenue)

@Simon Lau asked a very pertinent question after the latest quarterly results (2QFY15) were released, he highlighted the fact that a little over 10 acres of land has been reclaimed for the Ultra Harmony job since the previous quarterly result (1QFY15). [The exact figures are 10.2 acres reclaimed in 72 days - from 73.8 acres reclaimed on November 12 to 84 acres reclaimed as at February 4]

I asked management about this and was told that they had redeployed the bulk of their assets on other jobs during this period.

One rationale for this was that the company is actually quite a bit ahead of schedule for this job. They are looking to complete this entire job (meaning fully paid and booked) by 1QCY16/3QFY16 [This is stated in the latest quarterly notes]. In the original circular issued about this deal, they had estimated full completion of Stage 4 by July 2016. Meaning they are ahead by at least 4 months.

To be fair to the buyer, you cannot always unilaterally accelerate a deal as the buyer has their own financial/budgetary planning on when they expected to pay you.

It is like me coming to you and building you a house for cash. If I tell you it will only be ready in December 2015 (which is when you pay me) and I then come up to you in June 2015 and tell you it is ready and I want my money now, you may be somewhat less than enthusiastic if you do not have the funds ready.

Granted that the buyer in this case has deep pockets (the popiah king of Singapore - google him if you want to know more) which is probably why the job could be fast tracked to finish about half a year early.

To give you an idea of when they intend to complete the reclamation, if you assume that payment is to be completed by the end of March 2016 [as per the latest quarterly notes], you can backtrack it by adding 3+1 months for payment and 6 months for the land title, meaning that the land has to be fully reclaimed by end May 2015.

I asked management about this and they are confident of completing the job ahead of this target. They have a little less than 3 months (based off the Feb 4 figure) to reclaim 44 acres. As they have been reclaiming up to 3 acres a day at times, it should not be too difficult for them.

In the original circular, it was stated that they expected completion of Stage 1 to occur in May 2015 (meaning it should be booked as revenue in 4QFY15). I was informed (by others) that they might miss this deadline though. (Note this is uncertain and wholly my view)

One thing is for sure though, it seems likely that if stage 1 does not get booked in 4QF15, it (along with stage 2) should be booked in 1QFY16. Meaning that revenue for the period Jul-Sep 2015 should be at least RM117.89m with net profit at RM29.32m. (Note, this figure does not include offsetting administrative and operating expenses or gains/losses from other contracts/sectors for the period - more on this below, see Item 4. Ultra Green)

Posted by taciturn > 2015-02-23 11:42 | Report Abuse

4. Ultra Green
On 5 May 2014, Benalec was awarded a job by Ultra Green to reclaim 415 acres of land for a cash payment of RM203.89m.

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1614029

For informational purposes, Ultra Green is a an indirect subsidiary of Oriental Holdings. Ultra Green was awarded a reclamation concession for 1,125 acres in Melaka back in 1994. Of this amount, 624 acres have already been reclaimed, all by Benalec.

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1815077

Note, whilst this anouncement here states the reclamation contract is for an area of 275 acres, this in reference to what Ultra Green terms as Phase 2A, Phase 3A and Phase 3B.

An additional area to be reclaimed known as Phase 4 (140 acres) was also awarded to Benalec, although confusingly it was not disclosed by Oriental on 3 Dec 2014. Benalec's announcement on 5 May 2014 (6 months earlier) does refer to Phase 4. Management has confirmed that their contract is for reclaiming 415 acres.

Of interest here is that Ultra Green still has an untouched concession of 64 acres (this is out of an area of 86 acres, of which 22 acres is earmarked as a lagoon). I assume that this could be a future contract for Benalec. Using a simple calculation based off the RM203.89m for 415 acre contract, this 64 acres would be worth around RM31.44m if it should be awarded in the future.

As a note of interest, all previous reclamation jobs that Benalec did for Ultra Green was settled via payment in kind. It looks like Oriental wised up though to the fact that profit wise, it makes more sense for them to assume some of the risk via a cash contract (especially since Benalec has been delivering on their jobs all this while).

In Benalec's announcement for this contract, they assumed commencement of works in the 3QCY15. Unfortunately, it took Ultra Green somewhat longer than that to get regulatory approvals from the different authorities to get the work order.

Benalec has taken possession of the site in late January / early February 2015.

They have 30 months to complete the job. As this is a cash job, there will be monthly progress billings by Benalec which will be booked as revenue, and this should mitigate the issue of lumpy earnings somewhat for the duration of the contract.

Assuming the standard construction industry's net margin of 15% (it could be higher, although I doubt it is lower), Benalec should earn RM30m over the period of the contract. If you divide the value of the contract over the 30 month period, you get revenue and net profit of RM6.75m and RM1m respectively a month. Or RM20.25m and RM3m per quarter.

Of course this is likely to be boosted on the first month's billings (materials on site).

Assuming a 30 day payment period (this is my assumption), we should see at least 1 month's billings booked for 3QFY15, and 3 months billings for 4QFY15. Using the average figure above, that would come to RM28m in revenue and RM4m in net profit for 2HFY15. This is of course a simplistic view of things and may not be accurate. For all I know the billing cycle could be 45-90 days. (I did not confirm this point with management)

The contract does not include the cost of rock revetment works (one of the methods of construction on the shoreline to prevent erosion of your reclaimed land). A rough estimate of this works is 20% of the contract value, meaning an additional RM40m in revenue. As I am uncertain when revetment works are actually done, I have not included it in any of my assumptions for FY15.


For comparison purposes, when included with the Ultra Green contract (assuming monthly billings - RM4m net profit for FY15):

Assuming none of Ultra Harmony's stage are booked in 2HFY15. Net profit will be around RM19.5m. (PE of 34.2 for FY15)

Assuming only stage 1 of Ultra Harmony is booked in 2HFY15, net profit increases by RM14.81m, to RM34.31m. (PE of of 19.5 for FY15)

Assuming stages 1 and 2 of Ultra Harmony are both booked in 2HFY15, net profit would increase by RM29.32m, to RM48.82m. (PE of 13.7 FOR FY15)

Posted by taciturn > 2015-02-23 11:42 | Report Abuse

5. Jadex Land
On 2 Dec 2014, Benalec signed an SPA for the sale of 19.36 acres of land _to be reclaimed_ to Jadex Land for RM35.42m.

[http://www.bursamalaysia.com/market/listed-companies/company-announcements/1813105]

On the same date, Benalec signed an SPA for the sale of 39.27 acres of land _already reclaimed_ to Quality Paradise.

[http://www.bursamalaysia.com/market/listed-companies/company-announcements/1813109]

Quality Paradise is a subsidiary of Jadex Land.

For informational purposes, prior to this, on 19 June 2014, Benalec signed an SPA with Jadeline Multiple for sale of 15 acres of land for RM25.48m. This was completed on 19 Sep 2014 (which helped the recent 2QFY14 results a fair bit).

This deal was not announced to Bursa since the amount was below disclosure requirements.

Jadeline Multiple is a sister company of Jadex Land with common shareholders/directors.

Just to make it clear, the parcel sold to Jadex Land has since been fully reclaimed.


Again with the issue of lumpy earnings, this one can be a little more confusing.

On signing the SPA, the buyer paid 10% as a downpayment.

Up to 6 months from signing the SPA, the buyer pays another 20%.

Up to 9 months from signing the SPA, the buyer pays another 30%.

Up to 12 months from signing the SPA, the buyer pays the final 40%.

[Yes, yes, lawyerly types can read the fine print and nitpick on this last bit, I am not going to elaborate too much on it, since I am sure many of the readers who have reached this far already have droopy eyes. Hell, my eyes are glazing over reading that last bit in the announcement myself. Feel free to read the bursa announcement if you want to know more]

Note, the buyer can get an automatic 3 month extension if they cannot pay on time (subject to 8% p.a. interest charges).

Soooo, when does Benalec book the revenue? Yep, upon receipt of the final payment.

Here you can see an example of a contract where the cash flow is likely to be ahead of revenue.

Both deals are expected to be completed in 4QCY15 / 2QFY16, resulting in a net profit of RM28.1m.


6. Earnings for FY 2016
Whilst I am somewhat pessimistic about FY15 being a stellar year, I do believe FY16 would be a very good one.

Consider the following as net profit figures from contracts announced and in progress:

Ultra Harmony (assuming all 4 stages are booked in FY16) - RM58.49m
Ultra Green (12 months progress billings at RM1m profit a month) - RM12m
Jadex Land - RM28.1m

Offset against an estimated administrative and operating expenses figure of RM30m for FY16 (and assuming other segments do not drag the bottomline too badly):

58.49+12+28.1-30=RM68.59m

Again these are simply estimates, I cannot say how accurate they are, but I do not think I am too far off the ballpark. Some things are probably incorrect, i.e. the reclamation works for Ultra Green will likely be ahead of, rather than simply on schedule.

Assuming my figures are correct, the PER for FY16 is 9.7.

Posted by taciturn > 2015-02-23 11:43 | Report Abuse

7. Future sales (Melaka concession)
One should realise by now that as an investor in Benalec, you really have to be in it for the long haul. With lumpy earnings, any sales announced now would likely be enjoyed only in the latter half of FY16 or the early half of FY17.

There are not many instant / quickie sales although in some cases you can see that things are done quickly i.e. look at Jadeline Multiple 19 June 2014 to 19 Sep 2014, 90 days. Obviously this is for land whose titles Benalec already holds in hand. (the 6 month waiting period for land applications can be a real killer)

One of the questions I did ask was how much land does Benalec still have in its concessions for sale. Reading the differennt analyst reports, I could never get a sense of an accurate figure.

Finally I got the answer that I wanted.

Accoding to management, within its Melaka concessions, Benalec has 529 acres of unsold land.

Of this total, 289 acres have been reclaimed, whilst 240 acres are awaiting reclamation.

These figures are nett entitlements (meaning after deducting the state government's 1/6th share as well as the original concessionaire's share).

What does this mean in terms of monetary value? At RM42 per square foot (which is Benalec's historically transacted price for the past several sales), the value of reclaimed land awaiting sale is RM528.73m.

The value of the unreclaimed land awaiting sale is RM439.08m.

I neglected to ask if the land titles have all been issued for the reclaimed land, but I am assuming a good part of it has been. (there is a cost involved since you have to pay the state land office the land premium per square foot when you apply for the land title)

Whilst smaller parcels of land that are sold can be settled quickly (Jadeline Multiple's 15 acres for instance), I assume that buyers of larger plots would have a lot more leeway in negotiating for better payment terms (as can be seen with Jadex's 58.36 acres).

According to management they are in serious discussions with several large buyers and hope to close a couple of deals within this financial year.

However, again I have to stress, due to the lumpy earnings nature of some SPAs, one should not be looking for instant gratification in any large deal.

In other words, the unsold value of Benalec's Melaka concessions is:
528.73m+439.08=RM967.81m

of which more than half has been reclaimed.

Now the question on everyone's mind is of course, how much land can they sell? These are trying times that we are going through worldwide.

If you would like to base it on past precedents, For CY2014 (starting from March 2014 - ignoring the Teobros sale which was a resale of land that was rescinded back to Benalec), Benalec has announce SPAs for a little over 200 acres of land in Melaka.

Considering that the company had to get back onto right footing after the mess with the two older brothers, it seems like a commendable figure for the year.

I do not know if they can match it, but I am of course genuinely hoping that they can match if not exceed that figure.


8. Pengerang (Concession size - 1,760 acres)
I was informed that the submission for the DEIA was made on 21 January 2015.

Checks on the DOE's EIA reporting site still do not reflect this. In fact another entry has appeared under the review list since Benalec's submission date for an unrelated project (6 Feb).

I am going to assume that this is typical government efficiency at work (you know how it is, cinta IT, suka IT - tapi tak update IT). Assuming that the submission date is accurate, and based off an 84 day KPI, a decision on the submission should be made by 15 April 2015.

Management has indicated that whilst they are always willing and looking to sign deals, Pengerang may be placed on a back burner somewhat until the Pengerang Integrated Petroleum Complex (PIPC) develops further. I never realised how large the PIPC area is (20,000 acres) but can understand the sentiment of wanting to wait.

As Benalec's Pengerang concession is aimed towards fabricating yards, it makes sense for other investors to move into PIPC first, and then to offer the Benalec Pengerang site as a more attractive prospect (in terms of fabrication services).

Posted by taciturn > 2015-02-23 11:51 | Report Abuse

9. Tanjung Piai (Concession size - 3,485 acres)
Firstly, we have to recognise the fact that there is a binding term sheet with 1MY SOT for phase 1 of Tanjung Piai (1,000 acres). The binding term sheet disallows any negotiations for that part of the concession with anyone else except through 1MY SOT.

No such exclusivity exists for the rest of the concession though.

In the bigger scheme of things though, the term sheet expires on 11 June 2015. From what I have been told, the delay is not on Benalec or 1MY SOT's side, but the off-taker's side (a state investment arm from the middle east).

It is not that far to the expiry date (4 months). It should be interesting to see what happens then. Management has indicated that there is keen interest coming in from other parties, but they cannot do much with regards to phase 1. Should the term sheet be extended once again, then you can be fairly certain that a deal is just around the corner. I do not think Benalec would want to extend it again if they believe nothing is to come of it.

The point here is that ground has already been broken in Tanjung Piai. Whilst Benalec has decent cash flow to look forward to to fund the work (the ultra Harmony payments, Ultra Green monthly progress claims, RM200m convertible bond - funds which are expected to be released before the middle of this year) and they can keep things going for at least the next couple of years, they do have to prove that they can deliver on Tanjung Piai.

Management did not look too concerned regarding 1MY SOT though. With other potential off-takers willing to swoop in to fill the void, I believe that they are confident of securing their first off-taker within this calendar year (2015).

Of course then comes the question of how big a stake would any other off-taker claim. The advantage of having 1MY SOT as an agent is that they would likely be off-taking the entire 1,000 acres to the middle eastern investor. This would give Benalec a strong visibility for at least the next 3-5 years. Compared to someone coming in and grabbing 200 acres which only gives visibility for a year.

One interesting point about Tanjung Piai. In Johor, you can apply for and receive the land title before you have even reclaimed the land. The cost to Benalec here is the land premium. However, it is safe to assume that is a fee that Benalec will be willing to pay for at least part of the concession in order to speed things up.

Also, as a final view of my own, I think it is safe to say that eventually Benalec would probably go the Dialog way in either owning and leasing out oil storage terminals or even joint venturing with others to run terminals of their own. The idea here is to break the cycle of lumpy earnings and at the same time to gain some visibility in the form of more stable recurring income.

However this is likely to come later rather than sooner. An off-taker needs to be secured for a decent size of Tanjung Piai to show that the project is viable. Once that is proven, going the lease/JV venture would be far easier to do.


10. Pulau Indah
I regret that at this time I am unable to post clearly about Benalec's Pulau Indah concession. I thought I had all the answers in the discussions but I was somewhat distracted with my focus being on issues regarding the Johor and Melaka concessions. I could post what I have learned, but I am uncertain of the accuracy of some of the facts that I have on Pulau Indah.

As the CNY period is still on, I will only be able to clarify with management later on regarding this topic. Once I have done so, I will post a further update.

Just to clarify though, Pulau Indah is not a critical part of Benalec's concessions. Its valuations (according to my figures) should be less than RM100m. It is a nice sweetener should it be sold, but if nothing happens on that front, the world should still go on.


11. Conclusion
I hope my postings here have been informative for rational investors who read it as I have tried my best to ensure the accuracy of my postings.

Should you have any comments or criticisms (please lah, rational criticisms if any, would be appreciated, not the #simplytembak one liners) I would be delighted to hear and respond to them.

Also, Kong Hee Fatt Choy to the readers of this board. May this year prove to be an even more prosperous year.

Posted by Simon Lau > 2015-02-23 13:54 | Report Abuse

AWESOME!!!!!!!!!!!TACITURN and thank you very much.

Posted by Simon Lau > 2015-02-23 14:03 | Report Abuse

this is most detailed report i ever read . thanks again.

Posted by taciturn > 2015-02-23 14:08 | Report Abuse

Simon Lau: Cheers =)

Posted by JT5774 > 2015-02-23 14:35 | Report Abuse

taciturn, Thank you very much for such a detailed write-up on Benalec future earning and propect.

Really appreciate your time and effort.

"HAPPY CHINESE NEW YEAR"

Posted by splendid_ignorance > 2015-02-23 14:36 | Report Abuse

Thanks taci for your detailed analysis of the financials. Happy Lunar New Year to you.

It seems to me that any catalyst for FY15 would likely come from any further development on the Tg. Piai project given the likely recognition of the bulk of the company's revenue in FY16. Given that there are other off-takers potentially interested in Tg. Piai, here's to hoping that it would give some positive pressure to the Mid Eastern off-taker to complete the deal. Does not seem fair to keep it on hold for such a long period with no likely resolution in the near future when there are other buyers waiting at the side.

Posted by happyvic > 2015-02-23 14:50 | Report Abuse

Appreciate your hard work... but I couldn't finish reaching... too much... I have no time...haha

Posted by taciturn > 2015-02-23 15:06 | Report Abuse

Cheers guys. =)

splendid_ignorance: That is definitely the major catalyst everyone is looking forward to.

As we have less than 4 months to go before the term sheet expires, I do not expect an off-taker to be signed up by then. You can tell that Benalec's management is somewhat frustrated at the pace of things.

In the meantime, I do not really expect any major news to occur, excepting smaller catalysts such as further land sales. Management stated they were in the later stages of negotiations for such sales with different buyers. Whether any deals are made of course remains to be seen.

It is the post-June period I am waiting for. I am making a personal assumption that the term sheet will not be renewed. At that point, even a small off-taker grabbing the first 100 acres in Tanjung Piai would show that there is a real interest in the area.

Once the first sale is struck, then it should be much easier to secure the next batch of off-takers.

Posted by Ricky Kiat > 2015-02-23 15:22 | Report Abuse

good jobs taciturn .TQVM about the benalec info.

Posted by where > 2015-02-24 09:19 |

Post removed.Why?

Posted by where > 2015-02-24 09:20 |

Post removed.Why?

Posted by where > 2015-02-24 09:25 |

Post removed.Why?

Posted by taciturn > 2015-02-24 09:40 | Report Abuse

Oh my god....he used to work for another company! What a horror!

That link shows, last online, 6 years ago...

As per usual, one jenius on this board still insists on making a mountain of a molehill. Although in this case I do not even see what the molehill is.

Since one cannot find fault with Benalec, one has to try and make faults up.

Please, just go away. Come back after March when you said Najib would make a decision on Tanjung Piai's DEIA.

Posted by where > 2015-02-24 09:53 |

Post removed.Why?

Posted by taciturn > 2015-02-24 10:04 | Report Abuse

...

I have no clue why you would want me to call that number. Ask what?

If you're referring to my analysis posting here and the lack of confirmation of certain bits of information...

Well, of course some people would not realise (or care, I suppose) that it is Chinese New Year. During this period a lot of people are on leave.

I could of course be an ass and call those who are on leave to get answers to questions that I may still have. But I would prefer to be professional about it and only speak to them when they get back to work.

And I have sufficient contact numbers, thank you. I do not know why you felt it absolutely necessary to put that link up.

Please, just be silent. I would be so much happier if that were to happen. Or go to KLCC and jump, as you very crudely told me to do if Tanjung Piai's DEIA decision was not made (which DID happen on the date I specified).

It's bad enough we have jjwong's return to look forward to in two days time, from his latest suspension by the forum. No doubt he will come back with a blaze of glory on directors remuneration once again.

I was so enjoying the silence on this forum without him, the great gasbag and also the jenius of course. Now it is broken.

Posted by taciturn > 2015-02-24 10:05 | Report Abuse

Heh, and whilst I was typing this up, the jenius got suspended (not my doing). Ahh, silence can be golden at times.

Posted by taciturn > 2015-02-24 10:36 | Report Abuse

Update on Pengerang's DEIA submission:

http://www.doe.gov.my/eia/eia-reports-under-review-peia-deia/

The DOE has finally updated their site to reflect the submission.

Looks like some of the dates I got were off by a few days.

The submission date is stated as 23 Jan 2015. (though management had said it was done on the 21st - might be a miscommunication with the consultant)

Their decision is to be made on 22 April 2015. (89 days versus their KPI of 84 days, heh)

Posted by happyvic > 2015-02-24 11:08 | Report Abuse

Lol... one retard who goes yum cha with his friends and the other listens to radio the whole day... LOL

Posted by CaoCao > 2015-02-24 11:17 | Report Abuse

Thanks Taciturn, your hardworking report, analyst and prediction have been very useful and effective for us and the latest information are awesome.. For you and the rest of the member of i3 investor, i wish you all a Happy and Prosperous Chinese New Year. :-)

Posted by ahmadzul666 > 2015-02-25 12:51 | Report Abuse

Benalec Holding MD remuneration is paid RM8million. But the total dividend to be paid to all shareholders’ is only RM2.4million. This is ridiculous !!!!!!

Directors’ Remuneration of Benalec Holding VS Eco World Development Group Berhad.

Benalec Holding Directors’ Remuneration.
From 2014 annual report. They boast that BENALEC management has been very transparent about it.
No. of Directors - 6
Range of Remuneration Executive Directors Non-Executive Directors Total :
RM250,000 to RM300,000 - 1 Independent Non-Executive Director
RM300,001 to RM350,000 - 2 Independent Non-Executive Directors
RM350,001 to RM400,000 - 1 Executive Director
RM400,001 to RM450,000 - 1 Executive Director
RM7,500,001 to RM8,000,000 -1 Executive Director

Eco World Development Group Berhad Directors’ Remuneration.
The number of Directors whose total annual remuneration falls within the following bands is as follows:-
No. of Directors – 9
Below RM50,000 – 1 Independent Non-Executive Director
RM50,001 to RM100,000 – 4 Independent Non-Executive Directors
RM150,001 to RM200,000 – 2 Independent Non-Executive Directors
RM850,001 to RM900,000 - 1 Executive Director
RM1,200,001 to RM1,250,000 - 1 Executive Director

The remuneration package paid to Benalec Holdings Bhd’s group managing director Datuk Leaw Seng Hai, which has been labelled “excessive”, has roused the ire of some minority shareholders.They claimed that Leaw’s remuneration ranges between RM7.5 million and RM8 million in the group’s financial year ended June 30, 2014 (FY14), which is comparable to Benalec’s full-year net profit that year, which was RM7.12 million.
http://www.theedgemarkets.com/my/article/benalec-md%E2%80%99s-remuneration-questioned

Listen to the Business Radio Station BFM 89.9 to hear how they comments the higher paid of Benalec Holding RM8million to MD remuneration.
http://www.bfm.my/biztalk-dom-141223.ht