Alam Maritim - Secures charter for 1MAS-300 Buy

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

- Alam’s 50%-owned Alam Swiber DLB (L) Inc has secured a charter for its pipe-lay barge 1MAS-300 from Newcruz Offshore Marine Pte Ltd with an RM18mil contract for a firm period of 175 days, commencing by the third week of October 2012. 

- This contract is within expectations, which forms part of the additional RM200mil fresh offshore installation contracts targeted by the group this year. Together with new offshore contracts worth RM173mil secured since the beginning of the year, this new charter should raise the utilisation of 1MAS-300, and turn around the underwater and offshore installation division, which suffered a loss of RM4mil in 1HFY12.

- Recall that in January this year, Alam had secured  an offshore construction contract worth RM115mil with 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. 

- Additionally in August this year, the group had 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 in August and September 2012.

- The constant flow of new contracts supports our positive view of the group, which has secured RM507mil orders since the beginning of the year. These comprise RM209mil 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) fromExxonMobil Exploration and Production Malaysia Inc.

- Given the rising need for offshore installation work, 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 FY13F PE of 8x – above the oil & gas sector’s 16x.   

Source: AmeSecurities