Journey to Wealth
Alam Maritim Resources - Secures RM50m jobs in BCOT
News Alam Maritim Resources Bhd (ALAM) announced that its wholly-owned subsidiary, Alam Maritim (M) Sdn Bhd had secured a short term 30 days contract.
The RM50m one-off payment contract is meant for the provision of pipeline installation task forSKO PL364 pipeline replacement project.
In addition, ALAM was also offered two optional jobs in this contract, with their scopes focusing on partial commissioning and rock dumping. These two options are valued at RM7.73m.
Comments We believe that this contract is part of ALAM's Offshore Installation & Construction (OIC) order book replenishment, which is currently at RM170m.
A search on Serimax showed that this 82km length SKO pipelines in Bintulu Crude Oil Terminal (BCOT) has three Saturnax stations. We believe that ALAM will be installing the 27km 18'' diameter shore approach pipeline in BCOT.
Based on a 5% net margin for the contract value (RM50m), we expect a net income contribution of RM2.5m to its 3Q12 earnings.
We have already earlier imputed this into our FY12 estimates.
Outlook We remain optimistic on the company as its influx of contracts and recently released 1H12 results are reaffirming its turnaround story.
The above OIC job signals that ALAM is on the right track to replenishing its contract flow for more OIC jobs.
Forecast We are keeping our FY12-14E earnings of RM58.7m-RM94.8m unchanged.
Rating MAINTAIN OUTPERFORM
Given its recent contracts flow and acquisition plan, we believe ALAM is set to deliver an earnings turnaround this year.
Valuation Maintaining our TP of RM1.14 based on 10x Fwd PER on our FY13E EPS estimate of 11.4 sen.
Risks 1) Lower-than-expected OSV utilisation
2) Low rate of project replenishment
Source: Kenanga
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