Alam Maritim’s results beat estimates

by **Cals** Mon 25 Nov 2013, 14:11

Business & Markets 2013

Written by SJ Securities Research

Monday, 25 November 2013 11:04

Alam Maritim Resources Bhd
(Nov 22, RM1.57)
Maintain neutral at RM1.53 with a fair value of RM1.55: Alam Maritim’s results for the nine months ended Sept 30 of 2013 financial year (9MFY13) beat our estimates while accounting for 85% of the FY13 forecast. The better than expected third quarter (3Q) results were attributed to the higher contribution from the subsea/offshore installation and construction (OIC) segment. Hence, we are tweaking our FY13 forecast earnings upwards to incorporate the better subsea/OIC segment performance.

The 3QFY13 top line had improved by more than 100% quarter-on-quarter (q-o-q) from RM73.8 million to RM180 million due to the improved utilisation rate and higher contribution from third party charter. Despite the higher revenue, its 3QFY13 net profit was lower than 2Q at RM22.7 million. This was due to the lower operating profit margin from its jointly owned vessel compared to the wholly owned vessel.

The subsea/OIC segment revenue jumped more than fourfold in 3QFY13 from RM17 million a quarter ago to RM76.5 million. Its operating profit in the subsea/OIC segment recovered from a loss of RM4.6 million in 9MFY12 to a profit of RM11 million in 9MFY13. However, it has yet to secure new subsea contracts since September to sustain the subsea contribution in the last quarter of 2013.

We expect Alam Maritim to record lower results in 4QFY13 due to the lower margin from joint ventures or third party vessels and lower subsea contribution when the underwater service contract expires in November 2013.

In October, Alam Maritim secured two offshore support vessel (OSV) contracts worth RM60 million. One contract was for a 12,000bhp anchor handling tug supply vessel at RM22 million for six months spot charter while the other was for a straight supply vessel at RM38m for three years plus 1 year extension. These two OSV contracts have extended Alam Maritim’s order book to RM1.2 billion.

We are maintaining our FY14 forecast with a fair value of RM1.55 for now based on 13.5 times price-earnings ratio on FY14 earnings per share of 12.2 sen. We will revise it upwards once Alam Maritim secures a substantial contract. — SJ Securities Research, Nov 21

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This article first appeared in The Edge Financial Daily, on November 25, 2013.