Journey to Wealth
Alam Maritim - Secures two replacement workboat charter BUY
- We maintain BUY on Alam Maritim Resources (Alam), with an unchanged fair value of RM0.85/share, pegged to an unchanged FY12F PE of 12x ' at a 25% discount to the oil & gas sector's 16x.
- Alam has secured a contract to provide two accommodation workboats out of a letter of award to provide four such vessels to support Petronas Carigali's painting activities off Peninsular Malaysia.
- The contract, which commenced on 25 May 2012, requires two of Alam's accommodation workboats for a primary one-year period with an option to extend for another year.
- As Alam currently has only three accommodation workboats, with the other vessel currently chartered to ExxonMobil, we understand that the group is planning to secure a third-party vessel to provide one more accommodation workboat to Petronas Carigali.
- Including the option extension, the contract value of RM122mil translates into a charter rate of RM83,247/day, much higher compared to RM55,000-RM75,000 last year.
- We note that this is still lower compared to Alam's charter of an accommodation workboat by ExxonMobil Exploration and Production Malaysia Inc in the past three days for RM137,268/day. But we understand that the Petronas Carigali's estimated contract value does not include food catering charges for the crew.
- We maintain FY12F-FY14F net profits, which have already assumed replenishment for the expiry of vessel charters at higher rates.
- We estimate that fleet vessel utilisation rate has improved to over 80% with the vessels under the joint-ventures with CIMB and Tabung Haji having been fully chartered out.
- We continue to expect Alam to be awarded fresh charters for its idling and spot-chartered vessels as global utilisation has tightened. We note that day rates have been slowly rising on tightening global vessel utilisation.
- As such, we maintain our view that the company's earnings recovery is intact with an undemanding valuation of FY13F PE of 7x ' at the lower end of its historical PE band.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
