Alam Maritim (Alam) announced on Bursa Malaysia yesterday it has secured two contracts worth a combined RM85.2m, which will help offset the potential losses from its offshore, installation and construction (OIC) division. Since the company is likely to achieve our projected earnings growth of 28.3% for FY13, we maintain our BUY call, with our FV unchanged at MYR1.25.

Two vessels on short-term charter. Alam’s first contract (client unnamed) is for the provision of one platform supply vessel worth MYR13.0m for a charter period of 270 days and one work barge worth MYR10.9m for 104 days. These charters represent a daily charter rate (DCR) of MYR48,100 for the platform supply vessel and RM104,800 for Alam’s work barge.

Second job a long-term contract. The second contract is for the provision of one accommodation vessel from Petronas Carigali for a primary period of five years, with an optional extension period of another year. This contract is worth approximately MYR61.3m, including the optional extension period.

OSV division continues on winning streak. These two contracts bring Alam YTD contract wins to MYR814.7m. While this is positive news, we are leaving our earnings estimate unchanged as we had previously incorporated the latest contracts into our earnings forecast.

Maintain BUY. All in, we retain our BUY recommendation on the stock, with an unchanged FV of MYR1.25, pegged to 13x FY13 EPS. While Alam’s OIC division is likely to register losses of MYR4m-MYR6m per quarter this year, the near-term contracts secured by its OSV and subsea division are likely to offset those losses. In view of this, we believe our 28.3% earnings growth projection for FY13 is achievable.

Source: RHB