- We maintain BUY on Alam Maritim Resources (Alam), with an
unchanged fair value of RM0.85/share, pegged to an unchanged FY12F PE of 12x –
at a 25% discount to the oil & gas sector’s 16x.
- Alam has secured a contract to provide two accommodation
workboats out of a letter of award to provide four such vessels to support
Petronas Carigali’s painting activities off Peninsular Malaysia.
- The contract, which commenced on 25 May 2012, requires two
of Alam’s accommodation workboats for a primary one-year period with an option
to extend for another year.
- As Alam currently has only three accommodation workboats,
with the other vessel currently chartered to ExxonMobil, we understand that the
group is planning to secure a third-party vessel to provide one more accommodation
workboat to Petronas Carigali.
- Including the option extension, the contract value of RM122mil translates into a charter rate of
RM83,247/day, much higher compared to RM55,000-RM75,000 last year.
- We note that this is still lower compared to Alam’s
charter of an accommodation workboat by ExxonMobil Exploration and Production
Malaysia Inc in the past three days for RM137,268/day. But we understand that
the Petronas Carigali’s estimated contract value does not include food catering
charges for the crew.
- We maintain FY12F-FY14F net profits, which have already assumed
replenishment for the expiry of vessel charters at higher rates.
- We estimate that fleet vessel utilisation rate has
improved to over 80% with the vessels under the joint-ventures with CIMB and
Tabung Haji having been fully chartered out.
- We continue to expect Alam to be awarded fresh 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.
- As such, we maintain our view that the company’s earnings
recovery is intact with an undemanding valuation of FY13F PE of 7x – at the
lower end of its historical PE band.
Source: AmeSecurities
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