Period 4Q12/12M12
Actual vs. Expectations Alam Maritim Resources’ (“ALAM”) 4Q12 core net
earnings of RM17.1m brought its FY12 net earnings to RM55.7m. This was within
our full-year expectation of RM53.6m but above the consensus estimate of RM51.6m
(+8.1%).
Our core net earnings excludes a RM2.6m gain
on the disposal of fixed assets and a tax credit of RM1.7m.
Dividends No
dividend was declared, below our forecasted NDPS of 0.5 sen.
Key Results Highlights QoQ, the better performance of its
jointly-controlled entities (likely due to higher contract flows performed by
the subsea services and the OIC division, which worked on projects like the
Sabah Oil & Gas Terminal ("SOGT") project, Samsung Engineering
(Malaysia) and E8 & F13K Modules Offshore Facilities Transportation and
Installation ("MOFTI"), resulted in a 10.5% rise in net earnings.
This helped cushion the EBIT loss of RM3.3m, which was likely caused by subpar
margins on its wholly-owned OSVs given that they are lower-spec versus those of
ALAM’s associates and JVs.
YoY, the 4Q12 net profit was a complete
turnaround from the previous loss of RM400k, also due to the performance of the
jointly-controlled entities which were driven by the higher OSV daily charter
rates and better job prospects for the subsea and OIC divisions.
Outlook We
believe the OSV market is finally turning around and expect it to remain
vibrant (similar to the heightened activity seen in 2007-2008) and as such, the
stock is poised for a re-rating.
A buoyant future outlook is expected with
further OSV awards expected from the other PSC players such as Murphy Oil. (The
market talk is that there will also be more awards from PCSB as well.)
The catalysts for ALAM will be higher contract
flows for its Underwater Services division (OIC and Subsea), which we are
projecting only a single-digit operating profit in 2013.
Change to Forecasts Maintaining our FY13-14 earnings estimates
given that the reported net earnings were within our expectations. However, we
are looking to fine-tune our forecasts pending a meeting with management. We
are removing our NDPS estimates for now.
Rating Maintain OUTPERFORM
Valuation At an
unchanged PER of 12x, we are keeping our OUTPERFORM call with a TP RM1.09 on
ALAM.
Risks 1)
Lower than expected OSV utilisation and 2) a continuation of its sluggish
underwater services division works.
Source: Kenanga
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