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The week of 18 August – 24 August 2016
Volume 28 Number 01
TechnicalAnalysisof
UMW Oil & Gas Corporation Berhad
UMW Oil & Gas
Corporation Bhd
(UMWOG) was listed
in 1 Nov 2013. The
IPO had an impressive
20 sen premium debut
with its institutional
books oversubscribed
by 55 times. Following
these, it surged 40% to
its 2014 peak. It then
moved sideways as it
awaits contributions from
acquisition of 3 jack-up
drilling rigs. Then oil
price plunged in 2014
FROM PAGE 22
from above US$110 per
barrel to below US$30.
Operating in a new
normal of low oil price,
any rebound would be an
excellent chance to sell
UMWOG.
UMW Holdings Bhd, had to
provide financial assistance
in Jun 2016 in the form of
an intercompany loan of
RM308 mln for working
capital purposes. The loan
repayment period is over 5
years.
Renewables
The world is also fast
facing the prospects of
a long-term transition
away from fossil fuels
towards renewable energy.
Renewable energy has
become more competitive as
its cost has plummeted and
technologies improved. In
emerging economies such
as Mexico, India, South
Africa and the UAE which
are driving the bulk of growth
in energy demand, wind
and solar power developers
are increasingly winning
contracts without subsidies.
For example, Germany’s
2 biggest power utilities,
RWE and Eon along with
Vattenfall and Norwegian oil
and gas group Statoil are
looking to drive down cost to
€80 per megawatt hour by
2025. Offshore wind farms
now cost an average of
€141/MWh which is already
around 15% lower than at
the start of this decade. They
are also taking advantage
of bigger turbines coming
on to the market. In the
The world is also fast facing the
prospects of a long-term transition
away from fossil fuels towards
renewable energy.
Renewable energy
has become more competitive
as its cost has plummeted and
technologies improved.
longer term, this potential
move away from fossil fuel
could hold down its price
indefinitely.
Conclusion
At RM0.98, UMW OG is
capitalised at RM2.119 bln.
For this, what do investors
get in return ?
For reasons mentioned
in
i
Capital dated 24 Mar
2016, oil price has continued
to remain low instead
of bouncing back to its
previous highs. The incident
of Brexit has also caused
the US$ to strengthen since
the currency is considered a
haven. In addition, amongst
the major developed
economies, only the US is
showing sustained growth. A
stronger US$ makes it more
expensive for oil purchases
in other currencies as oil
price is priced in US$.
The latest Bank for
International Settlements
annual report warned about
a risky trinity of conditions:
unusually low productivity
growth, historically high
global debt levels and
remarkably narrow room
for policy manoeuvre (think
Federal Reserve and Janet
Yellen). With the gloomy
macroeconomic skies
looming over the global
economy,
i
Capital retains
its Sell rating for UMW Oil &
Gas Corporation.
UMW Oil & Gas was
first featured in
i
Capital
Recent Performance
30 Jun 2016 29 Jul 2016 % Change
ICGF NAV (US$)
1,064.691 1,070.547
0.55
MSCI ACWI (US$)
399.29
416.09
4.21
Total Return, From Inception
Since inception (%) Annual compound return (%)
7.05
0.75
1.99
0.22
NAV (as at 29 Jul 2016)
US$ 1,070.547
Fund Manager
Capital Dynamics (S) Pte Ltd
Structure
Open-end
Minimum Initial Investment
US$200,000
Features
No entry and exit fees, short selling, derivatives and no borrowings.
INCEPTION DATE – 6 JULY 2007
Introduction
C
apital Dynamics (S) Pte Ltd
(CDPL), the fund management
company, operates under the
purview of the Monetary Authority
of Singapore and is our platform
for global investing. CDPL is the
first Asian privately-owned global
fund manager. The objective is to
achieve superior long-term capital
appreciation by investing globally.
i
Capital Global Fund
ICGF CUMULATIVE PERFORMANCE IN US$
(JUL 2007 TO JUL 2016)
The performance of
i
Capital Global Fund for the period 6 July 2007 to 31 Dec 2015 has been independently verified. The performance for the period 1 January 2016 to 29 Jul 2016 is believed to be
reliable, but has not been independently verified. Past performance and any forecast are not necessarily indicative of future or likely performance.
dated 4th Dec 2014 at price
of RM2.56. Subscribers
who followed its lonely Sell
advice then would have
saved RM1.58 or a hefty
loss of 62%. With this latest
write-up,
i
Capital will stop
monitoring UMW Oil & Gas
until it is appropriate to do so
again.
B
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Capital Dynamics Sdn Bhd