Journey to Wealth
Alam Maritim Resources - OUTPERFORM - 31 May 2012
News Yesterday, Alam Maritim Resources Bhd ('AMRB') announced that its wholly-owned subsidiary, Alam Maritim (M) S/B ('ALAM') had been awarded a contract worth RM121.54m from PETRONAS Carigali S/B (PETRONAS Carigali), which would be its second contract win this week. The contract is to supply two workboats for the primary period of 1 year with an extension option of 1 year, for each workboat.
These workboats are required to support PETRONAS Carigali Peninsular Malaysia Operation's painting activities, which are to commence immediately.
Comments Positive on news as it backs up the group's 2012 turnaround story via its ability to secure long term charter contracts and increase orderbook.
We have assumed that ALAM will charter out its Setia Ulung and Setia Aman (5,150 bhp each) in order to fulfil the contracted activities during the primary period. Assuming a charter rate of USD85k per day and vessels utilisation rate of 80%, this will support the bottom line growth with a 20% net margin. However, there is no earnings impact as it forms part of our FY12E orderbook replenishment assumptions.
Outlook We remain positive on the company and anticipate another RM190m new orderbook assumptions out of our FY12E orderbook replenishment of RM440m.
Forecast Maintaining FY12-14E earnings of RM62.1mRM94.9m, as we maintain our FY12-14E orderbook replenishment assumptions.
There is possibility of ALAM securing higher than our FY12E expected orderbook replenishments and/or higher margin ones which implies further earnings upsides.
Rating MAINTAIN OUTPERFORM
We expect a stronger 2H12 on the back of improving contracts replenishment flows and a sustainable healthy vessels utilisation rate of 80%. Also, ALAM is aggressively bidding for more long-term contracts.
Valuation Maintaining our TP of RM1.14 based on 10x Fwd PER (-0.5SD) on our FY13E EPS estimate of 11.4 sen.
Risks Overall profitability in OSV being hit by other loss-making business units within the group.
Source: Kenanga
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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....
