ENRG and SMCB trade idea (from sales) - JP Morgan

* Sales idea – Energi Mega (ENRG): Brynjar E Bustnes, JPMorgan regional oil analyst who covers Inpex of Japan, wrote “The progress on abadi is, I think, faster than we expected six months ago with the scaling down of the project in mid December (see attached note) to a more manageable size (and no longer “ridiculous”). Newspaper (for oil people!) “Upstream” just noted that inpex (and the abadi project) has prequalified four parties for the floating LNG facilities (FLNG). This is good news as it shows progress.” My take – ENRG has a 10% stake in the Masela Abadi project, with another 10% potentially up for grab. As the Abadi project is progressing, there is scope for multi-national oil companies farming into the project. These M&A activities may set new price benchmark for Abadi.

Four set to battle for Abadi FLNG unit

18 March 2011

Upstream

FOUR groups of global contractors have set their sights on the liquefied natural gas floating production, storage and offloading vessel for the Abadi gas project in Indonesia. The partnerships that are understood to have passed a recent pre-qualification to bid for the floater are:

• JGC with Technip and Samsung Heavy Industries.
• Chiyoda with SBM Offshore.
• Saipem possibly alone.
• WorleyParsons with Hyundai Heavy Industries.


* Sales idea – Holcim (SMCB): The analyst community are in the midst of revising down 2011 earnings expectations for all Indo cement stocks, as their 4Q10 results are coming out (Indocement overnight and Semen Gresik next Monday). As year 2011 expectations becoming more realistic, the first two months of 2011 has been encouraging for cement consumption in Java island, particularly Jakarta. Holcim (SMCB) has the largest sales concentration in Jakarta and Java island, and their Jan-Feb sales volume data confirms the story: SMCB +22% yoy, INTP +8% yoy, SMGR +3% yoy. Year 2010 disappointment mainly came from weak 2H10 (early part of 2010 still strong), but to me this is exciting because if 2H11 sees economic acceleration, then the analyst community could scramble to re-upgrade their year 2011 forecast. SMCB should offer best leverage to this possibility (Not Rated by JPMorgan).