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Latest Forum Topics / Berlian LajuTank  Post Reply
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ozone2002
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19-Sep-2009 15:55     
 
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nice write up..good potential..

waiting for price to subside before entering.. still in infant stages..

 
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lawcheemeng
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18-Sep-2009 11:07     
 
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 Alert Admin 		moving liao......anybody on this ship........Goood write up..

BERLIAN LAJU's 'so huge and so rare' opportunity Print E-mail
Written by Leong Chan Teik   
Monday, 14 September 2009

This is the first part of our 2-part report on Berlian Laju Tanker, the largest shipping company in Indonesia and one of the largest in the world in the chemical tanker segment, both by tonnage and by number of ships.

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Peter Chayson, GM, investor relations department, Berlian Laju Tanker. Photo by Leong Chan Teik

TWO MAJOR industry rulings are taking effect and look set to significantly improve the business fundamentals of Berlian Laju Tanker (www.blt.co.id), Indonesia’s largest shipping company, which is dual-listed in Singapore and Jakarta.

These are:

a) International Maritime Organisation (IMO) ruling: Oil tankers which are non-double hull will not be allowed to ply international waters by end-2010.

The impetus for the ruling is that since 1990, ten out of 12 tanker-related oil spills involved vessels with single hulls.

b) Indonesian government ruling (cabotage law): It is mandatory to use Indonesian-flagged vessels for the shipping of chemicals, oil/gas and other liquids within Indonesian waters. Chemical tankers came under the rule from Jan this year while the oil & gas tankers will start from Jan 2010.

The practical and major hurdle for foreign players is not just the flag but a shareholding cap for foreign companies. In addition, the entire ship crew has to be Indonesian.

As a result of the IMO ruling, many non-double hull vessels will be available for sale at rock-bottom prices, which Berlian intends to buy at, according to Peter Chayson, the general manager of Berlian’s investor relations department.

Berlian will then flag them and deploy them in Indonesian waters to meet the mandatory requirement on the use of Indonesian-flagged vessels. Foreign-flagged ships have until now captured a significant market share in Indonesia's maritime transportation services.
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Source: Bloomberg

“The timing between the implementation of cabotage rule and the mandatory scrapping can’t be more perfect and this offers a significant arbitrage opportunity,” said Mr Chayson.
 
The key demand will come from Pertamina which currently uses over 70 foreign-flagged vessels out of its fleet of over 100 vessels. According to analyst reports, state-owned Pertamina spends over US$400 million a year to charter the 100 vessels.

Mr Chayson said that 56 of these foreign-flagged ships would come off charter between now and 2010. “This will present a big opportunity for us, and we have a good chance of getting contracts from Pertamina,” he said in an interview with NextInsight last week.

"Pertamina is looking for quality service as it is given a huge responsibility by the government to distribute all the much needed oil and gas products across the 17,000 islands in Indonesia on time.”

Mr Chayson added: “The arbitrage opportunity arising from the cabotage and IMO mandatory scrapping rules is so huge and so rare we want to use all possible financing alternatives available to get the funding needed for this opportunity.”

Low cost, low borrowing, low insurance
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Berlian owns 91 ships currently. Photo: annual report

He said that the scrapping of non-double hull tankers is gaining momentum, as owners have various economic reasons to sell now and not later.

“Buying these vessels at low cost means we can lock in our low cost for the long term, which means  low borrowings, low interest payments, low insurance premiums - and in the end increase profitability and shareholders’ value,” said Mr Chayson.

Yet another government mandate looks set to change the industry dynamics for Berlian: Indonesia is limiting the import of vessels by age. While vessels of up to 25 years of age are allowed now, the limit will be lowered to 20 next year, and to 15 in 2011.

“What this means is we will be practically competing only with double-hull vessels in future in the domestic market, as beyond 2011 virtually all non-double hull ships will no longer be available in the market. Our competitors will have to buy double-hull ships at normal market prices which are substantially more expensive,” said Mr Chayson.

The government is also encouraging local banks to lend to local shipping companies, which in the past had received ‘practically zero’ lending, said Mr Chayson.

”Indonesian banks would not lend to foreign parties and they will only lend to local players. Some of these banks have been in talks with us recently. Bank Mandiri recently agreed to lend us 500 billion rupiah.”

He added: “In addition, we have a substantially bigger balance sheet by far compared to our domestic competitors and have significantly better access to financing and we can leverage on our strong relationship with Pertamina. More importantly is our superior access to Indonesian crews with our strong affiliation with many prominent Indonesian maritime schools and maritime academies of which we have continued to provide scholarships for some of their students.”

Asked for a target number for the additional vessels to be bought, Mr Chayson said: “It will be substantial but I don’t have a particular number yet."

Berlian, which currently has 91 vessels in its fleet, recognizes that it alone cannot capture all the opportunities in the new environment, and so intends to partner third parties, including foreign players, who will contribute financing for the purchase of the ships, especially FPSOs (Floating Production, Storage and Offloading) and FSOs.

These ships would be for use in offshore support where demand is rising as Indonesia, now a net importer of oil, steps up its oil production, especially from offshore areas.

That will lead to higher demand for Indonesian-flagged offshore support vessels, as the cabotage rule will also apply – from Jan 2011 - to this business segment. Almost all existing FPSOs/FSOs in Indonesia are now of foreign flags.

Berlian is currently tendering for contracts in this area, said Mr Chayson, adding that the company intends to buy non-double hull tankers for conversion into FPSOs.
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Recent stock price of BLT: 11 cents

Look out for our second report in the coming days focusing on other key aspects of BLT’s business.

Recent story: BERLIAN LAJU: Different cargo, different fortunes
 

Related Items


© 2009 Next Insight
OOOD write up......
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wongmx6
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14-Aug-2009 19:57     
 
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Can be trade, But it is a waste as Odd lot usually you need to sell at lower price moreover you still need to pay Broker Fee. Since its share only trade at price of 0.12 Cents.

I suggest you forget it...... maybe 10 or 20 years later. It few thousand Dollars.




CHIEW1979      ( Date: 14-Aug-2009 15:56) Posted:



Sorry for misunderstanding, 3961 actually is 3.916 lot after placement the right. so how to trade 0.916 lot? thank
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CHIEW1979
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14-Aug-2009 17:07     
 
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yup i have buy acess right ,10 lot entitle 3.333lot, so i buy excesss right 6.667lot but finally they give me 3.916 lot. anyone have same problem with me?
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bennykusman
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14-Aug-2009 16:16     
 
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 Alert Admin 		wah.. u are so rich!

CHIEW1979      ( Date: 14-Aug-2009 15:56) Posted:



Sorry for misunderstanding, 3961 actually is 3.916 lot after placement the right. so how to trade 0.916 lot? thank
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des_khor
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14-Aug-2009 16:04     
 
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 Alert Admin 		Buy excess rights,I can confirm you sure get 84 shares to round up to 4000 shares.

CHIEW1979      ( Date: 14-Aug-2009 15:56) Posted:



Sorry for misunderstanding, 3961 actually is 3.916 lot after placement the right. so how to trade 0.916 lot? thank
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CHIEW1979
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14-Aug-2009 15:56     
 
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Sorry for misunderstanding, 3961 actually is 3.916 lot after placement the right. so how to trade 0.916 lot? thank
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Alligator
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14-Aug-2009 15:12     
 
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when you have more than 3 million shares, you probably dun want to do it yourself, because commission is too high

negotiate with your broker, they will lower commission for over million shares. 




CHIEW1979      ( Date: 14-Aug-2009 10:45) Posted:

hi, just get right 3916 lot , wonder how to sell odd lot? any expert pls advise.
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des_khor
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14-Aug-2009 14:56     
 
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 Alert Admin 		U are so rich.

CHIEW1979      ( Date: 14-Aug-2009 10:45) Posted:

hi, just get right 3916 lot , wonder how to sell odd lot? any expert pls advise.
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Hulumas
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14-Aug-2009 14:56     
 
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 Alert Admin 		Huh, you are a big player, you hold 3916 lots of right of Berlian Laju Tanker so it means about half a million Sgd. in value!

CHIEW1979      ( Date: 14-Aug-2009 10:45) Posted:

hi, just get right 3916 lot , wonder how to sell odd lot? any expert pls advise.
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Hulumas
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14-Aug-2009 14:52     
 
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 Alert Admin 		Wonder, you have 3916 lots, so you have no odd lot shares, so why you worry about it?

CHIEW1979      ( Date: 14-Aug-2009 10:45) Posted:

hi, just get right 3916 lot , wonder how to sell odd lot? any expert pls advise.
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wongmx6
Veteran
14-Aug-2009 10:49     
 
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You always can apply excess Right at ATM to make your odd lot to become full lot.

Chances are rather high.




CHIEW1979      ( Date: 14-Aug-2009 10:45) Posted:

hi, just get right 3916 lot , wonder how to sell odd lot? any expert pls advise.
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CHIEW1979
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14-Aug-2009 10:45     
 
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 Alert Admin 		hi, just get right 3916 lot , wonder how to sell odd lot? any expert pls advise.
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