Alam Maritim; Hold; RM0.535
Price target: RM0.60; AMRB MK

Alam continues to face stiff competition in the offshore support vessel (OSV) business due to the oversupply
of vessels. While there has been recent increase in activities for OSV, rates remain depressed at US$1.8/bhp
which is attributable to the huge supply of low-end vessels (~5,000bhp).

We continue to see uninspiring performance from its underwater segment which has seen margin
compression due to lack of substantial orders. Despite securing the Sabah Oil & Gas Terminal (SOGT)
RM115m transport & installation contract in January 2012, delays in the project have also further depressed
its earnings.

We remain concerned on its high gearing level (RM470m net debt or 93% net gearing as at June 2012). We
note that this excludes the gearing portion (undisclosed) of its associates and JVs which collectively own
c.40% of Alam’s fleet. In addition, its 2Q12 interest coverage ratio of 1x hardly provides any comfort to its
profitability.

Valuation-wise, Alam is currently trading at 10x FY12 EPS, which is more demanding than its OSV peer,
Perisai Petroleum’s 9x FY12 EPS despite its weak earnings visibility. Alam’s earnings may be dogged by project
delays and margin pressure going forward given the stiff competition, especially for its underwater services.
We cease coverage on Alam in view of a lack of catalysts going forward. Our last rating for Alam is HOLD
with RM0.60 TP.

Source: HwangDBS Research - 6 Sept 2012