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ALAM MARITIM RESOURCES BHD By AmResearch
by Cals Thu 19 Sep 2013, 16:24
ALAM MARITIM RESOURCES BHD
By AmResearch
Buy (maintained)
Target price: RM2.45
WE maintain “buy” on Alam Maritim Resources Bhd (Alam) with an unchanged fair value (FV) of RM2.45 per share, pegged to a financial year 2013 forecast (FY14F) price earnings (PE) of 16 times – at parity to the oil and gas (O&G) sector.
Alam has secured a contract, potentially valued up to RM39mil, to provide underwater services from an unnamed local O&G company.
The contract covers a firm period of 30 days with an option for extension of up to a maximum of 21 days.
Since the beginning of the year, Alam has secured RM246mil underwater services contracts from Talisman Energy Inc and other local companies.
But this new contract is within our expectations as our FY13F-FY15F assumptions incorporate underwater/offshore installation and construction orders of RM300mil-RM500mil. Hence, we maintain our forecasts.
Nevertheless, this development underpins our view that the group’s earnings prospects are improving as the offshore installation and construction and underwater services divisions, which made a combined loss of RM7mil last year, are expected to turn around on the back of an acceleration of new jobs.
Year to date, Alam has secured contracts worth RM1.17bil, of which 79% are marine charters for vessels that are either wholly-owned, under joint ventures (JVs) or for third parties.
For comparison, Alam’s current order book of RM1.3bil has surpassed its 2008 peak of RM1.1bil.
We understand that Alam hopes to secure RM1.2bil-RM1.5bil contracts for underwater services, which were earlier extended to Offshoreworks Group, currently in financial distress.
We understand that the group may enter a joint venture with Pacific Radius to acquire two diving support vessels to service its sub-sea inspection, repair and maintenance contracts, which could easily double prospective net margins from 10%-15% currently.
For the group’s wholly-owned vessels, fleet utilisation is at 85%, which means that only four vessels are on spot rates currently. Valuations are compelling at an FY14F PE of 10 times – way below the O&G sector’s 17 times.
By AmResearch
Buy (maintained)
Target price: RM2.45
WE maintain “buy” on Alam Maritim Resources Bhd (Alam) with an unchanged fair value (FV) of RM2.45 per share, pegged to a financial year 2013 forecast (FY14F) price earnings (PE) of 16 times – at parity to the oil and gas (O&G) sector.
Alam has secured a contract, potentially valued up to RM39mil, to provide underwater services from an unnamed local O&G company.
The contract covers a firm period of 30 days with an option for extension of up to a maximum of 21 days.
Since the beginning of the year, Alam has secured RM246mil underwater services contracts from Talisman Energy Inc and other local companies.
But this new contract is within our expectations as our FY13F-FY15F assumptions incorporate underwater/offshore installation and construction orders of RM300mil-RM500mil. Hence, we maintain our forecasts.
Nevertheless, this development underpins our view that the group’s earnings prospects are improving as the offshore installation and construction and underwater services divisions, which made a combined loss of RM7mil last year, are expected to turn around on the back of an acceleration of new jobs.
Year to date, Alam has secured contracts worth RM1.17bil, of which 79% are marine charters for vessels that are either wholly-owned, under joint ventures (JVs) or for third parties.
For comparison, Alam’s current order book of RM1.3bil has surpassed its 2008 peak of RM1.1bil.
We understand that Alam hopes to secure RM1.2bil-RM1.5bil contracts for underwater services, which were earlier extended to Offshoreworks Group, currently in financial distress.
We understand that the group may enter a joint venture with Pacific Radius to acquire two diving support vessels to service its sub-sea inspection, repair and maintenance contracts, which could easily double prospective net margins from 10%-15% currently.
For the group’s wholly-owned vessels, fleet utilisation is at 85%, which means that only four vessels are on spot rates currently. Valuations are compelling at an FY14F PE of 10 times – way below the O&G sector’s 17 times.
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