ALAM MARITIM RESOURCES - Scores extension charter for work barge

-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 announced that it has secured an extension of contract to provide an accommodation work barge for a firm 1 year period from 12 January 2013 to 11 January 2014 for RM34mil, which includes catering, lodging and demobilisation costs.

- We understand that the charter from Petronas Carigali is for Setia Station 1, a newly-built 300-men accommodation crane barge which was delivered in January 2011. The charter rate works out to RM92,000/day, which is an attractive price compared with the RM94,800/day contract which Alam secured in October last year for a self-propelled workboat.

- Demand for accommodation work boats remains strong compared to anchor-handling tug supply vessels with capacities of below 5,000 brake horse power. Hence, we are not surprised that offshore supply vessel operators are aiming to expand their investments into this market segment.

- These new jobs led to Alam 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 last year for RM95mil to service the 18-month charter contract (excluding a 1-year extension option) with ExxonMobil Exploration and Production Malaysia Inc.

- We expect new orders to increase this year compared to the RM548mil which Alam secured in 2012, of which RM191mil stemmed from offshore installation contracts and the charter of the group’s 50%-owned pipe-lay barge I-MAS 300, while RM316mil involves the charter of workboats and an accommodation work barge.

- Given the rising need for offshore installation work, Alam is well placed 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, with Perdana Petroleum recently securing RM500mil of fresh charter contracts.

- While the stock price has recently enjoyed a sudden spurt of excitement, valuations are still compelling at an FY13F PE of 10x – way below the oil & gas sector’s 16x. We are neutral on the possibility of corporate restructuring exercises at this juncture pending further newsflows.

Source: AmeSecurities