Bags first chartered contract for 2013. The company announced yesterday that its wholly-owned subsidiary, Alam Maritim (M) Sdn Bhd, had won a charter contract from Carigali Hess Operating Company Sdn Bhd for the provision of one unit of 5,150bhp AHTS. This valued the contract at USD7.04m (c.RM21.5m), which has a tenure of 21 months with no extension and is expected to commence in Mar 2013 and to be completed in Dec 2014. We are positive on the contract win as the daily charter rate (DCR) is USD11k or USD2.17/bhp. This DCR is considered attractive as compared to the usual DCR of USD1.80/bhp for a similar vessel. We understand that management is looking to announce at least two more charter contracts with a total value of RM48.5m before the end of this year.

A contract lost to SKPETRO.  Last week,  SapuraKencana Petroleum Bhd ('SKPETRO', OP; TP: RM3.42) announced that its subsidiary won the Inspection, Repair and Maintenance (IRM) contract worth RM700m from Petronas Carigali. We understand this is the same project that ALAM was vying for to provide some earnings stability to its underwater services unit. All is not lost, however, as we believe that ALAM could be a sub-contractor for works to SKPETRO, where we foresee a rental income here for ALAM's diving assets. However, the company is still busy with other IRM contracts bidding as well, with each contract value ranging from RM200m-RM300m.

Expecting a flattish 3Q12 results. The company has scheduled to announce its 3Q12 results in two weeks' time. It expects to post a flattish net profit of RM15m in 3Q12, bringing the  YTD 9M12 net earnings to RM35m-RM40m that will make up 60% of our previous FY12E estimate of RM58.7m. The main earnings contributor will be its OSV segment due to higher charter rates and improved vessels utilisation rates. However, its underwater segment is still making a loss from an unexpected cost overrun incurred due to delays in its SOGT project execution from the clients' end. As such, this has  led us to trim our FY12E estimates by 7.5% to RM54.3m from RM58.7m previously.