Alam Maritim secures charter for 12,000bhp AHTS

by **Cals** Mon 07 Oct 2013, 10:21

Alam Maritim secures charter for 12,000bhp AHTS
Business & Markets 2013
Written by AmResearch
Monday, 07 October 2013 10:08

ALAM MARITIM RESOURCES BHD []
Oct 4, RM1.49
Maintain buy at RM1.47 with a fair value of RM2.45: We maintain “buy” on Alam Maritim with an unchanged fair value of RM2.45 per share, pegged to a forecast 2014 financial year (FY14) price-earnings ratio (PER) of 16 times — at parity to the oil and gas sector.

Alam Maritim has secured a charter contract for an anchor handling tug supply (AHTS) vessel valued at RM22 million, which covers a firm period of six months and an option to extend for two months.

Based on an AHTS with an engine capacity of 12,000 brake horsepower (bhp), the charter rate of US$2.39 (RM7.60) per bhp represents a year-on-year (y-o-y) increase of 20% and is consistent with the current market rate for new vessels.

Hence, we continue to be positive on charter rates for the AHTS market segment, underpinned by a need for an additional 10 to 15 vessels this year in Malaysia.

For this charter, Alam Maritim will be using the 12,000 bhp AHTS, which is under a 50:50 joint venture with Lembaga Tabung Haji and is currently on spot charter. Among vessels under JVs, this is the only 12,000bhp AHTS vessel that is on spot charter. But we understand that this remaining spot charter vessel may be securing a long-term charter soon.

With 15 charters for AHTS and straight supply vessels secured so far this year, we understand the group’s vessel utilisation rate for its wholly owned fleet has risen quarter-on-quarter (q-o-q) from 70% to 80% currently with the rest of the vessels on spot charters.

Year-to-date (YTD), Alam Maritim has secured contracts worth RM1,240 million, of which 80% are marine charters for vessels that are either wholly owned, under JVs or for third parties.

Alam Maritim’s current order book of RM1.3 billion has surpassed its 2008 peak of RM1.1 billion. We maintain FY13 ending Dec 31 to FY15F earnings with assumed higher vessel utilisation rates of 80% to 90% as well as underwater/offshore installation and CONSTRUCTION [] orders of RM300 million to RM500 million.

We understand that Alam Maritim hopes to secure RM1.2 billion to RM1.5 billion worth of contracts for underwater services, which were earlier extended to Offshoreworks Sdn Bhd, currently in financial distress.

Alam Maritim may enter into a JV with Pacific Radius to acquire two diving support vessels to service its subsea inspection, repair and maintenance contracts, which could easily double prospective net margins from the current 10% to 15%. Additionally, the group hopes to secure part of the concessions for the Pan-Malaysian transport and installation umbrella contract, worth RM3 billion to RM5 billion annually, which may be opened for bidding later this year. — AmResearch, Oct 4

[You must be registered and logged in to see this image.]

This article first appeared in The Edge Financial Daily, on October 07, 2013.