Hot Stock Alam Maritim rises 4% after O&G contract extension

Hot Stock Alam Maritim rises 4% after O&G contract extension
Business & Markets 2014
Written by Jeffrey Tan of theedgemalaysia.com
Wednesday, 05 February 2014 12:10

KUALA LUMPUR (Feb 5): Alam Maritim Resources Bhd rose as much as 4% in morning trades after it announced it has been awarded a contract extension by ExxonMobil Exploration and Production Malaysia Inc for the provision of one unit accommodation barge.

At 11.43 am today, Alam rose 4 sen or 3% to RM1.45. The stock saw some 1.1 million shares exchanged hands.

In a note today, Kenanga Research said it is positive on the firmer charter rate, where the contract value implies a daily charter rate (DCR) of around RM160,200.

This compares with the DCR for the initial contract of around RM139,500.

“We are maintaining our forecasts for now despite our FY14 DCR assumptions for the accommodation barge at around RM140,000,” said Kenanga research analyst Cezzane See.

See also maintained ‘outperform’ for the stock with unchanged target price of RM2.07.

She said the contract extension was largely expected as the demand for accommodation barges remained strong.

Meanwhile, AmResearch said it continued to be positive on charter rates for the anchor handling tug supply vessel market segment, underpinned by a need for an additional 16 vessels this year in Malaysia.

The research house retained its‘buy’ call for the stock with a fair value of RM2.45.

AmResearch analyst Alex Goh said: “Currently, we understand that the group’s vessel utilisation rate for its wholly-owned fleet is around 80% with the rest of the vessels on spot charters.”

“We maintain FY13F to FY15F earnings with assumed higher vessel utilisation rates of 80%-90%.”

Goh said he also maintained underwater/offshore installation & construction orders of RM300 million to RM500 million.