News Yesterday, Alam Maritim Resources Bhd (“AMRB”)
announced that its wholly-owned subsidiary, Alam Maritim (M) S/B (“ALAM”) had been
awarded a contract worth RM121.54m from PETRONAS Carigali S/B (PETRONAS
Carigali), which would be its second contract win this week. The contract is to
supply two workboats for the primary period of 1 year with an extension option
of 1 year, for each workboat.
These workboats are
required to support PETRONAS Carigali Peninsular Malaysia Operation’s painting
activities, which are to commence immediately.
Comments Positive on news as it backs up the group’s
2012 turnaround story via its ability to secure long term charter contracts and
increase orderbook.
We have assumed that
ALAM will charter out its Setia Ulung and Setia Aman (5,150 bhp each) in order
to fulfil the contracted activities during the primary period. Assuming a charter
rate of USD85k per day and vessels utilisation rate of 80%, this will support
the bottom line growth with a 20% net margin. However, there is no earnings
impact as it forms part of our FY12E orderbook replenishment assumptions.
Outlook We remain
positive on the company and anticipate another RM190m new orderbook assumptions
out of our FY12E orderbook replenishment of RM440m.
Forecast Maintaining FY12-14E earnings of
RM62.1mRM94.9m, as we maintain our FY12-14E orderbook replenishment
assumptions.
There is possibility
of ALAM securing higher than our FY12E expected orderbook replenishments and/or
higher margin ones which implies further earnings upsides.
Rating MAINTAIN OUTPERFORM
We expect a stronger
2H12 on the back of improving contracts replenishment flows and a sustainable
healthy vessels utilisation rate of 80%. Also, ALAM is aggressively bidding for
more long-term contracts.
Valuation Maintaining our TP of RM1.14 based on 10x Fwd PER
(-0.5SD) on our FY13E EPS estimate of 11.4 sen.
Risks Overall profitability in OSV being hit by
other loss-making business units within
the group.
Source: Kenanga
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