Short position
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Short position
Saturday, 9 April 2016
A Tesla Model 3 sedan, its first car aimed at the mass market, is displayed during its launch in Hawthorne, California, March 31, 2016. Picture taken March 31, 2016. REUTERS/Joe White
Disruptive innovation
TESLA Motors Inc, the maker of fast and beautiful cars that run on battery, fits the classic description of disruptive innovation at work.
The American company and its founder Elon Musk is taking the automotive industry by storm with cars that is changing the perception of what an electric vehicle can do in a market dominated by petrol guzzlers.
Orders for its latest and cheapest model, the Tesla 3, has raked in more cash for the company during its first week of introduction compared with the amount raised from its initital public offer in June 2010.
The pre-order volume of 325,000 units for the Tesla 3 makes Tesla Motors the envy of its more traditional competitors. The US$35,000 sedan is only expected to hit the road in 2017.
Back home, Malaysia is setting itself up to become the electric vehicle hub in South-East Asia.
A Chinese company and a local partner is building a new plant in Gurun, Kedah with production targeted to start later this year.
Meanwhile, Proton Holdings Bhd, the national carmaker, is also developing its own electric car with at least RM100mil government grant it received in 2012. So far, no electric vehicle from Proton had made it to the showroom.
It is unclear whether the electric car project remains a priority at Proton, as the cash strapped carmaker struggles with development of new product lines to re-invigorate its brand and reverse slumping sales.
There is an ongoing debate about the future of Proton.
Malaysia is facing tough competition from its neighbours who are also vying to become regional hubs in the automotive industry. Proton, as the national carmaker, needs to show that it can come out with disruptive innovations with or without government intervention, or risk being stuck in the cold.
Whither Project 4A?
FROM June 2014 until today, the Project 4A power plant has yet to get its final go ahead from the Government.
That was when the project was first awarded to a company called SIPP Energy Sdn Bhd as part of a consortium. Since then other members of the consortium have left the group, leaving SIPP the only player still keen to pursue this project, which entails building a 1,100MW-1,400MW combined cycle gas turbine (CCGT) power plant in Pasir Gudang, Johor.
The last time SIPP was said to have submitted its latest proposal to the Government was sometime last November. Little has been heard of the outcome of that.
The concern is if there is a delay in Project 4A, would the country’s build-up of electricity capacity be impacted? Going by some reports, 4A was targeted to start commissioning by 2019 and going by some assessments, it is likely to be delayed, considering the time taken for financial close and the actual building of the power plant.
It has been reported that one cause of the delay has centred around negotiation of the tariff rates and a possible increase in the capacity of the power plant.
The proposal was reportedly asking a tariff rate in the region of 39 sen per kWh. But the rate of future concessions has to be benchmarked against the last completed gas-fired power plant, which was paid a tariff of 34.7 sen per kWh.
If a higher rate is agreed upon, it would likely mean that the increased cost would be passed on to consumers, who are already burdened by the rising cost of living.
To be sure, it isn’t entirely clear if any delays in Project 4A would have a significant negative impact, considering that some believe that the electricity reserve margin is manageable and that demand isn’t spiking up.
Whatever the case, the increased capacity for Project 4A will be needed in the future and the sooner this matter is settled the better.
Bumi Armada buffeted
ONCE hailed as Malaysian’s only top-tier floating production storage offloading (FPSO) vessel opertor, Bumi Armada Bhd’s shares now trade at just over half of its net asset per share.
Despite some research houses calling it an oversold stock, that’s not stopping investors from getting out. The Employees Provident Fund has offloaded almost 46 million shares in Bumi Armada over the last four weeks.
The one sliver of positive news recently was that Bumi Armada appointed a new CEO in the form of Leon A. Harland. But even that has failed to excite the market. What is needed now is for the company to quickly address the market and explain better the current situation the company is in. In particular, its FPSO contract in Australia which is facing a legal battle.
Recall, on March 8, Bumi Armada said that its FPSO operating in Australia’s Balnaves field had been terminated by the client, namely Woodside Energy. Following the termination, Bumi Armada has filed a suit against Woodside.
While, several analysts are saying that Bumi Armada would be able to get compensation from the contract termination, it does seem as if the market is not convinced and there are concerns that the termination would hit Bumi Armada’s bottom line this year. These concerns, coupled with the overall sentiment surrouding the oil and gas industry, are clearly reflected in the performance of Bumi Armada shares which hit a new low of 74 sen at yesterday’s close.
The market reaction may seem drastic, with some analysts calling the stock being oversold. The onus is on Bumi Armada’s management to give a thorough account of how its business is faring. In particular, how is the company coping with the currnet level of oil prices? Without this information, investors are going to remain spooked.
Short position
[You must be registered and logged in to see this image.]A Tesla Model 3 sedan, its first car aimed at the mass market, is displayed during its launch in Hawthorne, California, March 31, 2016. Picture taken March 31, 2016. REUTERS/Joe White
Disruptive innovation
TESLA Motors Inc, the maker of fast and beautiful cars that run on battery, fits the classic description of disruptive innovation at work.
The American company and its founder Elon Musk is taking the automotive industry by storm with cars that is changing the perception of what an electric vehicle can do in a market dominated by petrol guzzlers.
Orders for its latest and cheapest model, the Tesla 3, has raked in more cash for the company during its first week of introduction compared with the amount raised from its initital public offer in June 2010.
The pre-order volume of 325,000 units for the Tesla 3 makes Tesla Motors the envy of its more traditional competitors. The US$35,000 sedan is only expected to hit the road in 2017.
Back home, Malaysia is setting itself up to become the electric vehicle hub in South-East Asia.
A Chinese company and a local partner is building a new plant in Gurun, Kedah with production targeted to start later this year.
Meanwhile, Proton Holdings Bhd, the national carmaker, is also developing its own electric car with at least RM100mil government grant it received in 2012. So far, no electric vehicle from Proton had made it to the showroom.
It is unclear whether the electric car project remains a priority at Proton, as the cash strapped carmaker struggles with development of new product lines to re-invigorate its brand and reverse slumping sales.
There is an ongoing debate about the future of Proton.
Malaysia is facing tough competition from its neighbours who are also vying to become regional hubs in the automotive industry. Proton, as the national carmaker, needs to show that it can come out with disruptive innovations with or without government intervention, or risk being stuck in the cold.
Whither Project 4A?
FROM June 2014 until today, the Project 4A power plant has yet to get its final go ahead from the Government.
That was when the project was first awarded to a company called SIPP Energy Sdn Bhd as part of a consortium. Since then other members of the consortium have left the group, leaving SIPP the only player still keen to pursue this project, which entails building a 1,100MW-1,400MW combined cycle gas turbine (CCGT) power plant in Pasir Gudang, Johor.
The last time SIPP was said to have submitted its latest proposal to the Government was sometime last November. Little has been heard of the outcome of that.
The concern is if there is a delay in Project 4A, would the country’s build-up of electricity capacity be impacted? Going by some reports, 4A was targeted to start commissioning by 2019 and going by some assessments, it is likely to be delayed, considering the time taken for financial close and the actual building of the power plant.
It has been reported that one cause of the delay has centred around negotiation of the tariff rates and a possible increase in the capacity of the power plant.
The proposal was reportedly asking a tariff rate in the region of 39 sen per kWh. But the rate of future concessions has to be benchmarked against the last completed gas-fired power plant, which was paid a tariff of 34.7 sen per kWh.
If a higher rate is agreed upon, it would likely mean that the increased cost would be passed on to consumers, who are already burdened by the rising cost of living.
To be sure, it isn’t entirely clear if any delays in Project 4A would have a significant negative impact, considering that some believe that the electricity reserve margin is manageable and that demand isn’t spiking up.
Whatever the case, the increased capacity for Project 4A will be needed in the future and the sooner this matter is settled the better.
Bumi Armada buffeted
ONCE hailed as Malaysian’s only top-tier floating production storage offloading (FPSO) vessel opertor, Bumi Armada Bhd’s shares now trade at just over half of its net asset per share.
Despite some research houses calling it an oversold stock, that’s not stopping investors from getting out. The Employees Provident Fund has offloaded almost 46 million shares in Bumi Armada over the last four weeks.
The one sliver of positive news recently was that Bumi Armada appointed a new CEO in the form of Leon A. Harland. But even that has failed to excite the market. What is needed now is for the company to quickly address the market and explain better the current situation the company is in. In particular, its FPSO contract in Australia which is facing a legal battle.
Recall, on March 8, Bumi Armada said that its FPSO operating in Australia’s Balnaves field had been terminated by the client, namely Woodside Energy. Following the termination, Bumi Armada has filed a suit against Woodside.
While, several analysts are saying that Bumi Armada would be able to get compensation from the contract termination, it does seem as if the market is not convinced and there are concerns that the termination would hit Bumi Armada’s bottom line this year. These concerns, coupled with the overall sentiment surrouding the oil and gas industry, are clearly reflected in the performance of Bumi Armada shares which hit a new low of 74 sen at yesterday’s close.
The market reaction may seem drastic, with some analysts calling the stock being oversold. The onus is on Bumi Armada’s management to give a thorough account of how its business is faring. In particular, how is the company coping with the currnet level of oil prices? Without this information, investors are going to remain spooked.
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