- We maintain BUY on Alam Maritim Resources (Alam) with an unchanged fair value of RM2.45/share, pegged to a FY14F PE of 16x – at parity to the oil & gas sector.

- Upstream reported today that a joint-venture between Alam and Swiber Offshore has won a subcontract for offshore installation work on Petronas’ Block SK 316 gas development off Sarawak. We understand that the installation contract - The Alam-Swiber joint venture is understood to have been subcontracted by Technip and Malaysia Marine Heavy Engineering (MMHE) to install the central processing platform and the bridge from mid-2015 to the third quarter of 2015.

- Technip and MMHE were jointly awarded a turnkey contract late last year covering engineering, construction and installation of the central processing platform (CPP), the connecting bridge and up to two wellhead platforms for the combined NC3 and NC8 field development in Block SK 316.

- NC3 will host the CPP, which will be connected to a satellite platform at NC8. First gas from Block SK 316 is scheduled to flow by the end of 2015 and will be fed to the ninth liquefied natural gas train under Petronas MLNG complex in Bintulu.

- Block SK 316 also hosts the Kasawari field, which will be developed using a standalone central processing platform and a wellhead structure. Petronas was due to tender the planned Kasawari facilities in early 2014 but the bid round is said to have been held back as the stateowned field operator re-evaluates its tender strategy.

- As the Alam-Swiber failed to secure a package under the Pan-Malaysia transport and installation (T&I) umbrella concession late last year, the JV is actively seeking new projects in the region. Our channel checks indicate that the level of activities under the Pan-Malaysian T&I contracts this year could be lower than 2013 due to the initial design and engineering works in the programme.

- For the underwater division, we understand that Alam hopes to secure parts of the RM1.2bil-RM1.5bil contracts, which were earlier extended to Offshoreworks Group, currently in financial distress.

- We expect 4QFY13 results, scheduled to be released later this month, to come in below expectations due to one-off provisions. For now, we maintain FY13F-15F core earnings. Valuations are compelling at an FY14F PE of 9x– half of the oil & PP 12247/06/2013 (032380) gas sector’s 18x.

Source: AmeSecurities