THE BUZZ
Yesterday, Alam announced that its 100%-subsidiary, Alam Maritim (M) SB, has received a letter of award from ExxonMobil Exploration and Production Malaysia Inc (EMEPMI) for the provision of 1 accommodation barge. The contract is for a primary period of 18 months, with an extension option exercisable by EMEPMI for another 12 months. The contract is valued at RM125.6m if EMEPMI engages the barge for the full duration, including the optional 12-month period.
OUR TAKE
Positive, but no change in FY12-13 earnings. This is because we had earlier assumed some jobs replenishment for the company's vessels. More new jobs sail in. It is our view that although the Bursa announcement did not mention where EMEPMI would deploy the accommodation barge, we believe that it could possibly be used to provide brownfield services. This is because we understand that Petronas and its PSC contractors' focus this year would be on marginal oilfields, enhancing the oil recovery rate as well as brownfield services. In fact, we note that for Alam's peers like Dayang and Petra Energy, 2012 is also the year for brownfield projects worth between RM5.0bn and RM8.0bn from Petronas and its PSC contractors. We also gather that the industry expects minimal delays in the tender timeline because most of the contracts are for renewal purposes since there are already existing O&G jobs in progressnin the offshore fields. As for Alam, we believe its other AHTS as well as supply and utility vessels would become handy, especially when the mass projects are handed out.
Maintain Buy. Our fair value for Alam remains unchanged at RM0.70, based on the existing PER of 12x FY12 EPS.