News Alam
Maritim Resources Bhd (ALAM) announced that its wholly-owned subsidiary, Alam
Maritim (M) Sdn Bhd had secured a short term 30 days contract.
The RM50m one-off
payment contract is meant for the provision of pipeline installation task forSKO
PL364 pipeline replacement project.
In addition, ALAM was
also offered two optional jobs in this contract, with their scopes focusing on
partial commissioning and rock dumping. These two options are valued at
RM7.73m.
Comments We
believe that this contract is part of ALAM’s Offshore Installation &
Construction (OIC) order book replenishment, which is currently at RM170m.
A search on Serimax showed that this 82km length SKO
pipelines in Bintulu Crude Oil Terminal (BCOT) has three Saturnax stations. We believe
that ALAM will be installing the 27km 18’’ diameter shore approach pipeline in
BCOT.
Based on a 5% net
margin for the contract value (RM50m), we expect a net income contribution of RM2.5m
to its 3Q12 earnings.
We have already
earlier imputed this into our FY12 estimates.
Outlook We
remain optimistic on the company as its influx of contracts and recently
released 1H12 results are reaffirming its turnaround story.
The above OIC job
signals that ALAM is on the right track to replenishing its contract flow for more
OIC jobs.
Forecast We are
keeping our FY12-14E earnings of RM58.7m-RM94.8m unchanged.
Rating MAINTAIN OUTPERFORM
Given its recent
contracts flow and acquisition plan, we believe ALAM is set to deliver an earnings
turnaround this year.
Valuation Maintaining our TP of RM1.14 based on 10x Fwd PER
on our FY13E EPS estimate of 11.4 sen.
Risks 1)
Lower-than-expected OSV utilisation
2) Low rate of
project replenishment
Source: Kenanga
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