Alam Maritim has received a Letter of Award from Petronas Carigali for the provision of spot charter  marine vessels. The Contract is for a period of two years with an extension option of one year exercisable by Petronas Carigali. Under  the  Umbrella  Contract,  Alam  will  provide  marine  vessels  for  the following  categories:  anchor  handling  tug  /  supply  vessel,  straight  supply vessel, fast crew boat, workboat, work barge, general purpose/utility vessel and  platform  supply  vessel.  The  total  contract  value  will  depend  on  the actual number of days the vessels are on-hire based on instructions from the Petronas Carigali. (Source: Bursa Malaysia)

Comments:  We  are  positive  on  the  contract  win.  The  Umbrella  Contract limits the pool of eligible vessels suppliers, lessens competition and likely to increase  Alam’s  overall  vessel  utilisation.  That  said,  the  actual  vessel utilisation  is  dependent  on  Petronas  Carigali’s  work  schedule  and  hence, the  umbrella  contract  win  is  unlikely  to  materially  lift  Alam’s  immediate business  outlook,  in  view  of  a  likely  reduction  in  upstream  activities. Maintain HOLD on Alam with an unchanged TP of RM0.74.

Source: Affin Hwang Capital Research - 6 Mar 2015