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Affin IB Research maintains Buy on Alam Maritim, raises target price

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Affin IB Research maintains Buy on Alam Maritim, raises target price Empty Affin IB Research maintains Buy on Alam Maritim, raises target price

Post by Cals Fri 16 May 2014, 02:07

Affin IB Research maintains Buy on Alam Maritim, raises target price
Business & Markets 2014
Written by theedgemalaysia.com   
Thursday, 15 May 2014 08:45

KUALA LUMPUR (May 15): Affin IB Research has maintained its Buy rating on Alam Maritim Resources Bhd at RM1.51 with a higher target price of RM2.10 (from RM1.83) after Alam said it plans to acquire a diving support vessel (DSV) under a JV agreement with an existing asset owner.

In a note Thursday, Affin Research said Alam would only need a capital outlay of RM40 million to fund the purchase of US$80 million DSV.

It said the chartering cost of a DSV (currently in the range of US$80,000-120,000/day) typically accounts for up to 75% of the subsea IRM operating cost.

Affin IB said the proposed acquisition was a timely expansion to secure a bigger pie of the upcoming RM2bn domestic subsea IRM contracts.

“We raised our 2015-16E net profit forecast by 18-19% and EPS forecast by 2-3% after factoring in higher charter income from the new DSV, higher OIC & subsea earnings, lower net interest expenses, and 15% dilution impact from the issuance of new shares.

“We rolled forward our valuation basis to 2015 and raised our target price to RM2.10 (from RM1.83) based on an unchanged 14x forward PER. Maintain Buy,” it said.
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