Alam Maritim - Scores 5th workboat charter BUY

- We maintain BUY on Alam Maritim Resources, but with an unchanged fair value of RM0.85/share, pegged to a FY12F PE of 12x – at a 25% discount to the oil & gas sector’s 16x. We maintain our FY12F-FY14F earnings as its latest new charter contract is within our expectations. 

- Alam has secured a work boat charter contract from  an undisclosed oil & gas company for a 1-year contract value of RM69mil, or RM189,600/day. The contract has an extension option of 1 additional year. This is a charter contract for the fifth workboat for Alam since the beginning of the year. 

- In May this year, the group had secured a RM122mil charter contract (which has a 1-year extension option) for  four workboats from Petronas Carigali, or RM83,200/day to support painting activities in Peninsular Malaysia. 

- The constant flow of new contracts supports our positive view of the group, which has secured RM489mil orders since the beginning of the year. These comprise RM191mil charter contracts for vessels and RM298mil offshore construction jobs such as transportation and installation of pipelines. 

- These new jobs led to the group buying Crest Station 3, a 100 metre-Accommodation Work Barge, which has a capacity of 402 crew members, from Pacific Crest Pte Ltd in June this year for RM95mil to service the 18-month charter contract (excluding a 1-year extension option) from ExxonMobil Exploration and Production Malaysia Inc.

- In January this year, Alam secured an offshore construction contract worth RM115mil from Samsung Engineering Malaysia Sdn Bhd to transport, install and pre-commission two pipelines, two single point moorings and two pipeline end manifold for the Sabah Oil & Gas Terminal. 

- In August this year, the group secured another construction job worth RM58mil from a local oil & gas company to provide 18” diameter pipeline installation work for SKO PL364 pipeline replacement project over a two- month period from August-September 2012.

- These fresh contract inflows support the management’s view of a strong turnaround in the offshore installation division, with the group eyeing additional RM200mil fresh contracts in this segment. We also expect Alam to be awarded additional charters for its idling and spot-chartered vessels as global utilisation has tightened. We note that day rates have been slowly rising on tightening global vessel utilisation.

- As such, we maintain our view that the company’s earnings recovery is intact with an undemanding valuation of FY12F PE of 7x – at the lower end of its historical PE band. 

Source: AmeSecurities