Alam Maritim announced that it has won an award from Petronas Carigali for the EPCIC of a 10” x 1km pipeline for Terengganu Crude Oil Terminal effluent discharge line extension project worth MYR26m. Maintain our TRADING BUY with a MYR0.56 TP as we expect it to stand a good chance of securing more Petronas FLNG1 related contract.

Salient details. Alam Maritim Resources (Alam Maritim) announced that it has received a letter of award from Petronas Carigali SB for the provision of engineering, procurement, construction, installation and commissioning for a 10” x 1km pipeline for Terengganu Crude Oil Terminal (TCOT) effluent discharge line extension project. The contract value is approximately MYR26m. Physical execution of the contract is expected to start in Mar 2016 with date of completion by end of Jun 2016.

YTD win of MYR157m. With the contract win, we estimate Alam Maritim’s current orderbook to be around MYR600m which would keep the group busy until 2023. Its subsea, offshore installation and construction segment has won MYR157m worth of jobs YTD. To combat the low utilisation rate of its offshore support vessels, Alam Maritim is concentrating on winning more subsea, offshore installation and construction jobs to shore up its orderbook.

Maintain TRADING BUY as we believe the company stands a good chance of winning more PETRONAS Floating LNG 1 (PFLNG1) related projects, as the company has won two major PFLNG1 contracts worth a total of MYR103m. With the latest contract awarded, we do not discount it winning more contracts outside the scope of PFLNG1. As the amount of the new contract falls within our estimates of Alam Maritim’s new orderbook wins for FY16, we make no changes to our earnings at this juncture. Maintain our TRADING BUY recommendation with a TP of MYR0.56 based on 9x FY16F P/E (upside 19%).

DCF Valuation. Apart from our P/E valuation of Alam Maritim, we offer an alternative DCF valuation of Alam Maritim arriving at a TP of MYR0.43. Implicit in our assumption for the alternative valuation is a 50% base case utilisation rate of its offshore support vessels. We deem this to be conservative considering its utilisation rate during good economic times is 70-80%, and subsea awards of MYR200-300m per year.

Financial Exhibits

Financial Exhibits

SWOT Analysis

Company Profile

Alam Maritim Resources (Alam Maritim) is mainly involved in the chartering of offshore support vessels (OSVs) and provision of subsea services. It has one of the largest OSV fleets in Malaysia

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Source: RHB Research - 2 Dec 2015