BNS may start work on patrol vessels next year

THE construction of six patrol vessels by Boustead Heavy Industries Corp Bhd (BHIC), a maritime engineering and defence-related services provider, may only begin as early as the fourth quarter of next year.
Analysts estimate that it can easily take another year before BHIC’s letter of intent (LOI) is firmed up and construction of the patrol vessels begin.
“This is as seen with the company’s Scorpene service job, which took a year for the LOI to be firmed up via the letter of award,” ECM Libra said in a research report.

According to HwangDBS Vickers Research, the six second-generation patrol vessels will be built at BHIC’s Lumut shipyard, which is currently 50% utilised.

BHIC received a LOI from the local Defence Ministry to construct six second-generation patrol vessels with combatant capabilities.
In its filing with Bursa Malaysia on Monday, the company says its associate company, Boustead Naval Shipyard Sdn Bhd (BN Shipyard), received the letter dated Oct 15. It adds that the value and duration of the project are to be negotiated with the Government.
However, AmResearch Sdn Bhd says the value of the six new patrol vessels can reach RM8bil, based on a 20% mark-up from the first batch’s price tag of RM6.7bil.
“We understand that the letter of award will be despatched over the next four to six months after the price has been finalised,” it says.
ECM Libra adds that the new order for six patrol vessels with combatant capabilities, littoral combatant ships, has more technical specifications than the first-generation batch which amounted to some RM1bil per vessel.
“We believe per unit cost should be higher. Assuming a value of RM1.2bil per vessel, the contract will provide BN Shipyard with an RM7.2bil orderbook that will likely last it five to seven years,” it adds.
The recent contract, which has been long awaited, is part of a privatisation agreement with the Government for the construction of 27 units of patrol vessels, where six have been completed.
In 1998, BN Shipyard was awarded a contract to construct and deliver six patrol vessels to the Royal Malaysian Navy. The first two were delivered in 2006, followed by two more in 2009. The first two are being used to patrol the waters off Sabah and Sarawak while the third and fourth patrol vessels are guarding the east coast of the peninsula.
According to the BHIC’s 2009 annual report, the remaining two patrol vessels were launched in November 2008 and July last year respectively.
HwangDBS Vickers Research says the second-generation patrol vessels will be built at BHIC’s Lumut shipyard, which is currently 50% utilised. However, AmResearch estimates that 30% of BN Shipyard’s contract will be undertaken by BHIC’s Penang shipyard (Jerejak).
AmResearch has upgraded its call on the stock from a “hold” to “buy” with raised fair value of RM5.50 per share by removing the 20% discount to its unchanged sum-of-parts valuation of RM5.50 per share.
“Our fair value implies a financial year 2011 (FY11) forecast PE (price/earnings) of 10 times. The stock currently trades at an attractive FY11 forecast PE of eight times, which is a bargain for the sole military yard in the country with massive order book prospects,” it said.
BHIC was awarded a contract worth some RM1.3bil by the government to service the two Royal Malaysian Navy Prime Minister-class Scorpene submarines in August.
The contract was given to its subsidiary, Boustead DCNS Naval Corp Sdn Bhd, a joint venture with DCNS SA, a French defence company, and was effective for a period ending Nov 30, 2015.
The contract differed in value from the original letter of intent of RM600mil dated June 4, 2009 due to the inclusion of a full submarine integrated logistics support package.
AmResearch points out that the group’s earnings track record has disappointed in the past year and it maintains FY10 to FY12 forecast earnings pending a significant quarterly earnings improvement and the actual award of the new patrol vessels contract.
For the six months ended June 30, BHIC’s net profit was down 4% to RM31.5mil as a result of cost escalations due to delays in completing certain shipbuilding projects, coupled with reduced contribution from associates. Revenue fell 18% to RM192.9mil from a year ago.
“But the LOI indicates a new flow of awards is likely to gather momentum, which could catalyse a re-rating on the stock,” it adds.
Other potential contracts in the pipeline include new maintenance contracts for the first two patrol vessels, which were delivered in 2006, potentially worth up to RM60mil per annum, and two patrol vessels, worth RM500mil each, for the Malaysian Maritime Enforcement Agency (MMEA).
This is on top of the RM130.7mil contract secured by BHIC from the Government to design, construct and commission 10 units of fast interceptor craft for MMEA.

A war that can be won BEHIND THE HEADLINES WITH BUNN NAGARA Malaysia and South Korea have shown the world how to tackle pirates.

MALAYSIAN naval commandos did well in freeing 23 crew members from a ship hijacked by Somali pirates late on Thursday night.
The Malaysian-flagged oil tanker MT Bunga Laurel was in the Gulf of Aden to transport RM30mil of oil to Singapore. Malaysian naval forces were also in the area to help in shipping security.
After the navy had escorted the Bunga Laurel into safer waters in the gulf and left, the pirates struck. They boarded the tanker with pistols and assault rifles, but the crew scrambled and sent out a distress call.
Within two hours the Malaysian navy’s special forces returned, shot three pirates, overpowered the rest and released the crew. By early Friday morning seven pirates were captured, with no crew members or rescue personnel injured.

The South Korean cargo ship Samho Jewelry was hijacked by Somali pirates in the Arabian Sea on Jan 15. It was some 700 nautical miles from the Somali coast, once considered safe international waters.
A South Korean naval destroyer followed the hijacked vessel for several days before a special forces team was sent to rescue the 21 crew members. A pirate injured the ship’s captain, but in return eight pirates were killed and all the crew and rescue team were safe.

Strong message to pirates - Dont Mess With PASKAL

Saturday January 22, 2011

PETALING JAYA: Quick action by the Royal Malaysian Navy’s elite team in rescuing MT Bunga Laurel will send a strong message of deterrence to pirates in the Gulf of Aden.
Maritime Institute of Malaysia senior fellow Nazery Khalid said the action by the Pasukan Khas Laut (Paskal) proved Malaysia’s resolve in safeguarding its maritime interests and its commitment to fighting piracy.
“It will send a strong message to pirates that their crime will be met with a decisive response,” he said.
“The incident also highlights the need for shipowners to exercise caution when sailing in the Gulf of Aden.

Under control: The commandos watching over the Somali pirates.

“Whenever possible, merchant ships should adopt a safety-in-numbers approach by travelling in convoys and taking evasive manoeuvres to avoid boats that appear hostile,” said Nazery, adding that it would be impossible for the naval force to protect the entire Gulf area from pirate attacks.
Shipowners, he added, should also ensure their vessels were equipped with a security alert system to enable communication with naval forces on patrol in times of distress.
An official with the London-based International Maritime Bureau (IMB) said, prior to any operation, the rescue team should first ensure the ship’s crew was safe before boarding the vessel.
“In this case, I believe the crew had already locked themselves in a citadel or a room where they could survive for three to four days. If the crew was already held captive, any drastic move by the authorities would have put their lives at risk.
“From what has been reported, I believe the crew of the Malaysian chemical tanker had already locked themselves in a room,” he told The Star yesterday.
The official said there were similar rescue operations last year.
According to the IMB website, four vessels had been hijacked this year alone. Thirty-one vessels are still being held by Somali pirates.
The Gulf of Aden and Red Sea have been identified as piracy hotspots.
Pirates firing automatic weapons and rocket-propelled grenades would attempt to board and hijack the vessels for a ransom.

Najib commends Navy team for heroic rescue

KUALA LUMPUR: Datuk Seri Najib Tun Razak congratulated the Royal Malaysian Navy on its success in rescuing a Malaysian chemical tanker, saying Malaysia was studying international laws on how to deal with detained pirates.
The Prime Minister said: “We will determine what we should do (with the pirates); whether we are going to bring them here to be tried or take any other appropriate action.”
Speaking to reporters after launching the 1Malaysia Youth Fund here yesterday, Najib said: “I am proud of the success. They had acted efficiently and demonstrated their bravery in rescuing the tanker.”
The navy’s elite team Pasukan Khas Laut (Paskal) recorded a victory when it foiled an attempted hijack by Somali pirates on the MT Bunga Laurel in the Gulf of Aden on Thursday.
Commandos on board the navy’s auxiliary ship Bunga Mas 5, headed by Komander Mohd Nazri Sharif, saved the tanker that was headed for Singapore in the nick of time.
Defence Minister Datuk Seri Ahmad Zahid Hamidi also congratulated the commandos for a job well done

Lumut Naval Town, Malaysia: ROYAL MALAYSIA NAVY commandos foil hijack attempt ...

Lumut Naval Town, Malaysia: ROYAL MALAYSIA NAVY commandos foil hijack attempt ...: "22 Jan 2011 from Star Online KUALA LUMPUR: The Royal Malaysian Navy has foiled an attempted hijacking by Somali pirates on the MT Bunga La..."

ROYAL MALAYSIA NAVY commandos foil hijack attempt in Gulf of Aden

22 Jan 2011 from Star Online

KUALA LUMPUR: The Royal Malaysian Navy has foiled an attempted hijacking by Somali pirates on the MT Bunga Laurel, a Malaysian chemical tanker, in the Gulf of Aden on Thursday.
Commandos from the navy’s elite team Pasukan Khas Laut (Paskal) on board the navy’s auxiliary ship Bunga Mas 5, headed by Komander Nazri Sharif, arrived in time to save the tanker that was heading for Singapore.
A total of 18 pirates, who were involved in the attack, surrendered. Seven pirates were on board Bunga Laurel while 11 were aboard their mothership.
The tanker, laden with lubricating oil and ethylene dichloride, was attacked by the pirates about 300 nautical miles (555km) east of Oman at 11.40pm.

Ragtag arsenal: Some weapons and ammunition seized from the Somali pirates.

The commandos’ swift action prevented the Malaysian International Shipping Corporation (MISC) from losing the cargo worth an estimated RM30mil, and saved 23 Filipino crew members on board the vessel.
Navy chief Admiral Tan Sri Abdul Aziz Jaafar said Bunga Mas 5 had just completed the task of escorting the tanker and another MISC liquefied natural gas carrier, MT Seri Balhaf, bound for Fujairah, to a safe zone called Easton 4 in the gulf.
“MISC Emergency Reporting Centre (ERC) received a security emergency indication at about 11.37pm from MT Bunga Laurel. MISC called Bunga Laurel by phone but there were no response from the vessel,” said Adm Abdul Aziz.
“At exactly 11.40pm, Bunga Mas 5 called MISC ERC to report that Bunga Laurel had been attacked and pirates were attempting to board the ship by using skiffs. A suspected mothership was also reported in the vicinity.
“The 23 crewmen managed to assemble in the citadel (engine room). All lights were switched off and the main engines disabled,” he said, adding that the pirates’ attempt to barge into the citadel failed.
The commando team in two boats, led by Lt-Komander Maznan Said and Lt Noor Asri Roslan, were dispatched from Bunga Mas 5, located 14 nautical miles (25.9km) away, at 1.20am.
At the same time, the navy’s Fennec attack helicopter piloted by Lt Jason Solomon John provided reconnaissance and aerial cover.
Gunshots were exchanged between the pirates from the Bunga Laurel and snipers from the Bunga Mas 5 and helicopter. The pirates’ mothership attempted to move closer to Bunga Laurel but was thwarted.
Eventually, after taking heavy fire from Bunga Mas 5 and the helicopter, the pirates decided to surrender via radio.
All the pirates were captured. Three pirates suffered injuries from gunshots or splinters and given first aid, but no Malaysians were injured.