Journey to Wealth
Alam Maritim Resources - OUTPERFORM - 28 May 2012
News Last Friday, Alam Maritim Resources Bhd ('ALAM') announced that its wholly-owned subsidiary, Alam Maritim (L) Inc ('AMLI') has completed a joint venture (JV) transaction with Globe Marine Services Co ('GLOBE').
GLOBE and AMLI hold 60% and 40% equity stake respectively in the JV entity, known as Globe Alam Marine Services Co.
Comments The purpose of this JV is to venture and explore into the oil and gas industry in Middle East, particularly in the Kingdom of Saudi Arabia.
The JV company is incorporated to undertake the projects that provides marine constructionrelated ion of maritime services, which we believe it will benefit ALAM's core businesses, namely Offshore Vessels Services and Underwater Services.
Based on the JV company's authorized share capital of SR500,000.00, AMLI is required to invest c.RM168k, assuming exchange rate of SR0.80 for RM1.00.
We believe ALAM should have no difficulty for this initial investment funding given its relatively small capital outlay.
At this juncture, we do not impute the earnings contribution for FY12E.
Outlook We are neutral on the JV as its still at the preliminary stage.
Forecast Maintaining FY12E-14E earnings of RM54.3mRM76.4m.
Rating MAINTAIN OUTPERFORM
We believe the company will continue to see earnings growth in FY12E as a result of the improving vessels utilisation rate and the group are aggressively bidding for long-term contracts.
Valuation Maintain our TP of RM1.00 based on 12x PER on our FY12E EPS estimate of 8.3 sen.
Risks Exposure to political and global economic condition risks for the JV in Middle East.
Source: Kenanga
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