Thursday, July 25, 2013

Rotary/ Hiap Seng/ PEC

Rotary/ Hiap Seng/ PEC: According to a Bloomberg article (24 Jul), Singapore LNG Corp might expand its LNG terminal operations by adding a fourth storage tank, after engineering consultant WorleyParsons completed its design study. PEC, Rotary and Hiap Seng effectively dominate the market for the EPC and maintenance services to the petroleum refineries and petrochemical facilities in Singapore. PEC has about half of the petroleum-refinery maintenance market, with the remainder split between Rotary and Hiap Seng. The company is also working on Singapore Refinery Company’s refinery and has maintenance service contracts for Shell and ExxonMobil facilities. Hiap Seng, which also fabricates gas compression units, has announced one contract win a month since April. In June, the company started work on a $31.2 million contract for piping, equipment and tank construction works for the Singapore LNG Terminal project. Rotary in 2011 secured contracts in Singapore include ground preparation and civil works for Chang Chun’s planned petrochemical plant on Jurong Island, as well as the construction of three tanks for Alstom Power Singapore on the island. Rotary has seen its share price come back to life since the start of Jul, gaining a respectable 21%. This is compared to the 1.7% and -1.7% share price performance for PEC and Hiap Seng respectively. Both counters should see positive spillovers upon any further newsflows.

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