Journey to Wealth
Alam Maritim Resources - Secures RM69m workboat contract
News Alam Maritim Resources announced that its wholly-owned subsidiary, Alam Maritim (M) S/B, had been awarded a contract worth RM69.2m from an undisclosed local oil & gas company.
The contract is to immediately supply one workboat for a primary period of 1 year with an extension option of 1 more year. The contract value is inclusive of the optional period.
Comments Positive on contract as it shows that ALAM is able to secure long term charter contracts to keep its turnaround story intact.
This is the 5th contract secured by ALAM this year, and total to-date contracts have reached RM488m.
We understand that the contract is a third party vessel charter, where ALAM will source the workboat from an external local player. All its workboats are currently already chartered out for other jobs. The daily charter rate for this contract is considered to be attractive (c.RM96,000) versus the daily charter rate of the contract won in May-12 (c.RM83,000).
Based on a projected 20% net margin for the contract value of RM69.2m, we expect a net income contribution of RM13.8m from the entire contract.
For FY12, we expect a proportionate net earnings recognition of RM1.7m for 4Q12, which we had imputed in earlier into our FY12 estimates.
Outlook Uptrend in contract award values implying better trends for the overall sector moving ahead.
Strong 2H12 on the back of 1) an assumed healthy vessels utilisation rate of 80% for the OSV unit and 2) execution of the remaining RM10m from the RM20m SOGT project from its US segment.
Forecast We are keeping our FY12-FY14 earnings forecasts unchanged.
Rating MAINTAIN OUTPERFORM
Valuation Maintaining our TP of RM1.14 based on CY13 PER of 10x.
Risks 1) Lower-than-expected OSV utilisation and charter rates; and 2) Low rate of project replenishments.
Source: Kenanga
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