Journey to Wealth
Alam Maritim Resources - Another contract in its bag
News Yesterday, Alam Maritim Resources ('ALAM') announced that its 50% jointly controlled entity, Alam Swiber DLB (L) Inc, had recently entered into a RM18m charter party agreement with Newcruz Offshore Marine Pte Ltd.
The RM18m spot charter contract is to charter out its pipe lay barge identified as 1MAS-300 for a firm charter period of 175 days, which is to start immediately.
Comments We are positive on the news as it shows that ALAM is able to mobilise its pipe lay barge on a spot term basis to keep the vessel occupied during the domestic monsoon season.
We have been guided that the pipe lay barge is to be chartered out to India in bareboat condition, hence giving a better earnings margin to the group on the back of the lower cost incurred compared to time charter condition.
As guided by the management, the daily charter rate is USD35k (~RM108,000) for a firm period of 175 days. Based on a projected 35% net margin for the contract value of RM18m, we expect a net income contribution of RM6.3m from this entire contract.
We expect proportionate net earnings recognition of RM1.6m each for 4Q12 and 1Q13, respectively, which we have factored in into our FY12-FY13 estimates earlier.
Outlook We understand that Newcruz Offshore Marine Pte Ltd and Swiber Offshore (India) Pvt Ltd are Swiber Holdings Limited's subsidiaries. Through such a strategic networking tie-up, we believe that ALAM will be able to secure more international charter agreements in the future.
The trend of its increasing order book implies a better prospect for the group and the sector moving forward. We expect a strong 2H12 on the back of 1) an assumed vessel utilisation rate of a healthy 80% for its OSV segment and 2) the execution of the remaining RM10m of its RM20m SOGT project in 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 Lower-than-expected OSV utilisation and charter rates
Slower-than-expected project replenishments.
Source: Kenanga
Related Stocks
| Chart | Stock Name | Last | Change | Volume |
|---|
More articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City
Created by kiasutrader | Mar 29, 2018
Kenanga Research - On our Portfolio - Parliament dissolution around the corner?
Created by kiasutrader | Mar 25, 2013
Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT
Created by kiasutrader | Mar 25, 2013
Pavilion Reit - Limited upside, earnings upside have been priced in HOLD
Created by kiasutrader | Mar 25, 2013
Discussions
Be the first to like this. Showing 0 of 0 comments
Post a Comment
Featured Posts
Introducing MY's First IPO Fund for Sophisticated Investors!
New Update. Discover investment communities that resonate with your ideas
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
Apps
Top Articles
2
3
BFM Podcast
4
5
BFM Podcast
6
Koon Yew Yin's Blog
CPO price is rising rapidly as shown by chart below - Koon Yew Yin
7
Axcapital's investment blog
KAB - Executing its way to a record quarter. Could more Petronas contracts be coming?
8
Mercury Securities Research
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
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....
