Asian Supply Base optimistic of weathering economic turbulence
LABUAN: Fully integrated logistics hub, Asian Supply Base Sdn Bhd (ASB), is optimistic of weathering the unpredictable economic condition as it has diversified its earnings base over the years. the halal trade, globally, prompted us to think of this industry.
“(Venturing into halal industry) is not only to sustain our workforce but also to ensure our infrastructure and facilities are fully utilised…part of our base can also be used for halal logistics,” he told a press conference yesterday.
Hariss, who is also Labuan Halal Hub chairman, said ASB’s vast land was not only meant for O& G infrastructure but could also be utilised to provide manufacturing and warehousing infrastructure,
He said a number of high-ranking ASB officials were on business trips to Europe, United States, Australia and China to lure potential investors to Labuan.
“We have sufficient land for investors, we have no problem in providing them land for their business operations and infrastructure…the Labuan Member of Parliament and the Labuan Corporation have agreed to assist us, should we need more land,” he said.
Harris said the ASB had injected large investments to provide infrastructure especially for the O&G players over the last 35 years.
“We must provide enough infrastructure for the investors to come and that is why ASB, through its subsidiary, and Sabah’s GLCs are looking at partnering foreign investors from United Kingdom to attract more industries soon to Labuan,” he said.
He added that under the current sluggish situation, oil exploration and production jobs may be slower but maintenance and services continued to ‘stay afloat’ and was on the upside.
As it anticipated strong demand support with inventory draw down in 2H17, the research arm’s full year forecast remained unchanged.
The research arm pointed out that year on year ( y- o-y), oil price would still register an improvement from a low base of US$ 43.7 per bbl average in 2016, leading to a firmer footing for the oil and gas industry.
“Beyond 2017, the industry might not see oil prices reaching US$ 100 per bbl within the next five years; oil prices might take longer than that to recover to its previous heights mainly due to US shale technology improvement allowing shale oil economics to be viable even at US$ 50 per bbl level.
“Short investment cycle of shale rig has also given US shale producers the ability to produce more oil within 6 months’ time, lowering oil supply shock possibility for world oil market,” HLIB Research said.
HLIB Research highlighted that despite bleak long term outlook, significant downside appears to be limited as the Organization of the Petroleum Exporting Countries (OPEC) countries would more than likely to be incentivised to extend their production cut beyond March 2018 to cover their government’s fiscal budget.
“EIA has also factored in the extension of production cuts by OPEC in their global oil production forecast,” the research arm said.
It added that overall net deficit of world oil market is expected to materialise in 2017 but will soon return to surplus in 2018 which points to stable oil price outlook rather than improving oil prices.
All in, HLIB Research maintained its ‘neutral’ call on the sector with oil prices expected to remain range bound.
“The sector is expected to continue trading sideways while gradual increase in capex in the upstream segment is expected,” it said.
On a side note, HLIB Research’s top pick for the sector was Dayang Enterprise Holdings Bhd as attractive valuation with a potential value unlocking corporate exercise is expected to refloat Perdana Petroleum Bhd shares.