News Alam Maritim Resources Bhd announced that its wholly-owned
subsidiary, Alam Maritim (M) S/B, had been awarded a contract worth RM19.0m from
an international oilfield provider that resides in Malaysia.
The contract, which
started in 4Q12, is to supply a unit of straight supply vessel (SSV) for a primary
period of 9 months (RM8.1m) with an extension option of 12 months (RM10.9m).
Comments We are
positive on the contract as it shows that ALAM is able to secure long term
charter contracts with the OSV contracts flow being in line with our sector
report dated 19 Dec 2012.
The daily charter
rate (DCR) for this contract is slightly higher (USD1.90/bhp) as compared to
the DCR of the contract won in early 2012 (USD1.80/bhp).
Based on a projected
20% net margin for the contract value of RM19.0m, we expect a net income
contribution of RM3.8m from the entire contract.
For FY12, we expect a
proportionate net earnings recognition of c.RM0.5m for 4Q12, which we have
already imputed in earlier into our FY12 estimates.
Outlook ALAM’s share price has rallied strongly by 12%
since last Wednesday, which we believe is due to the market expecting the group
to benefit from the upcoming OSV contract awards by Petronas.
The trend of its
increasing order book implies a better prospect for the group and the sector moving
forward.
We remain optimistic
on ALAM as the company’s turnaround story is intact and hence we are expecting
a strong set of FY12 earnings results, which is due to be announced in February
2013.
Forecast We are
keeping our FY12-FY14E earnings forecasts unchanged.
Rating MAINTAIN
OUTPERFORM
Valuation At an
unchanged PER of 10x, we are keeping our OUTPERFORM call with a TP RM0.92 on
ALAM.
Risks Lower than expected OSV utilisation and
charter rates
A slower than
expected project replenishments.
Idle activities for
its Underwater Services division (OIC & Subsea) after the completion and recognition
of SOGT.
Source: Kenanga
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