- We maintain our HOLD rating on Alam Maritim (Alam) with an unchanged fair value of RM0.60/share, based on an FY16F PE of 9x.

- Alam announced that its jointly-controlled entity, Alam Swiber Offshore Sdn Bhd, has secured a contract from Chevron Malaysia Ltd for the installation works for the replacement of subsea pipeline at the latter’s Prai Terminal.

- The contract is worth approximately RM22mil. The job had commenced early June and is expected to be completed by 31 December.

- We maintain our forecasts, which have already assumed revenue of RM120mil- RM150mil for FY15F-FY16F for the T&I and underwater services divisions. Based on a pretax margin assumption of 15%, we estimate that this project could generate earnings of ~RM2mil for FY15F to Alam.

- Alam would most likely utilise its 300-man pipelay accommodation workbarge, 1Mas- 300, for this project which involves 4-5 pipelines at the terminal.

- We are positive on this news, given that this is the second installation job secured by the group this month amidst the slow capex cycle, which would offset the muted performance of its OSV segment. The group’s order book stands at ~RM900mil, and is bidding for RM2.5 – 3bil worth of projects.

- This would be further supported by the recent umbrella contract awarded by Petronas Carigali Sdn Bhd (PCSB) for the provision of spot charter for marine vessels, whereby Alam was awarded seven of the eight packages. We have not factored this into our earnings for now as the contract value is not fixed and will depend on the actual number of days the vessels are on hire based on a call-out basis by PCSB.

- The stock currently trades at an FY15F PE of 9x.

Source: AmeSecurities Research - 24 Jun 2015