Period 3Q12/9M12
Actual vs. Expectations Alam Maritim Resources (“ALAM”) registered
3Q12 net earnings of RM15.5m, which were within ours and the street’s
expectations. This brought its 9M12 net earnings to RM39.0m, which accounted
for 72% and 76% of ours and the street’s
FY12 full-year estimates respectively.
Dividends No
dividend was declared as expected.
Key Results Highlights QoQ, the net earnings dropped by 4% due
mainly to two factors, i.e. 1) a lower group revenue in 3Q12 as the revenue
recognition for SOGT had been mostly recognised earlier in 2Q12 and 2) a higher
effective tax rate in the quarter of 7%. Note that at the pre-tax level, ALAM’s
3Q12 PBT actually grew by 5% to RM15.9m from RM15.2m in 2Q12.
Offshore Support Vessels (OSV) recorded an impressive
turnover improvement by 94% as ALAM secured a few long contracts in 9M12. Its
core earnings driver unit, OSV saw its EBIT soaring by ~100% QoQ, underpinned
by a higher vessels utilisation rate and daily chartered rate, especially for
its jointly owned vessels with CIMB Private Equity.
In addition, its Underwater Services (US) unit narrowed its
loss before tax in 3Q12 to RM1.1m from RM2.5m in the preceding quarter, mainly driven
by the SOGT project completion in 3Q12.
As a result, ALAM’s 9M12 net profit rose significantly by
>100% to RM39.0m from RM13.0m a year ago. The highlight is its US division,
which performed outstandingly as it secured two major projects namely SOGT
(awarded by Samsung Engineering S/B) and MOFTI (secured from Sarawak Shell
Bhd).
Outlook We
remain positive on ALAM as the company’s turnaround story is being proven to be
very real and intact and hence, we are expecting a stable 4Q12 earnings
results. This is on the back of an assumed healthy vessels utilisation rate of
80% coupled with an increasing better daily chartered rate (USD 1.80/bhp) for
the OSV.
Change to Forecasts We are maintaining our FY12-FY14E
estimates with assumptions of an 80% utilisation rate for OSV and a projected
EBIT margin of 7% for US.
Rating MAINTAIN
OUTPERFORM
Valuation At an unchanged PER of 10x, we are keeping
our OUTPERFORM call with a TP RM0.92 on ALAM.
Risks 1) Lower than expected OSV utilisation, and
2) A low rate of project replenishments, which would put its
forward earnings at risk.
Source: Kenanga
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