Journey to Wealth
Alam Maritim Resources-OUTPERFORM-06 June 2012
News Yesterday, Alam Maritim Resources Bhd ('AMRB') announced that its jointly controlled entity, Alam Radiance (L) Inc (with equity interest of 51%) had acquired an accommodation barge for USD31.6m (c. RM94.7m) from Pacific Crest Pte Ltd (PCPL).
The accommodation barge is identified as Crest Station 3 and is designated to support the RM125.6m contract awarded by ExxonMobile Exploration and Production Malaysia Inc on 28th May 2012.
Comments We are positive on this acquisition as it is in line with the fleet expansion plan on offshore marine services which the group targeted to grow.
If this acquisition is funded via a 80:20 debt to equity. AMRB will need to invest RM10.0m for this barge acquisition for its part of the funding, which will be raised internally.
At this juncture, the payment of deposit and progress payments are funded by internal funds from Alam Radiance.
To recap, the RM125.6m contract won from ExxonMobile has a duration of a primary period of 18 months with an extension option of 12 months.
Outlook We remain positive on the company and expect a stronger 2H12 as we anticipate that AMRB will secure additional contracts totaling RM190m in the coming months. Its developments are on track to achieve our assumption of a RM440m orderbook replenishment in FY12.
Forecast We are keeping our FY12-14E earnings of RM62.1m-RM94.9m unchanged as we have already imputed the earnings contribution from the contract.
As stated in our previous report, we have assumed a daily charter rate of USD75k with an operating profit margin of 35% from Crest Station 3 for FY14E.
Rating MAINTAIN OUTPERFORM
Given the recent contracts flow and acquisition plan, we believe AMRB is set to deliver a stronger 2H12.
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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