Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: AMMB
Alam Maritim Resources Bhd
(Nov 29, RM1.09)
Maintain buy at RM1.09 with revised fair value of RM1.31: We reaffirm our 'buy' rating on Alam Maritim, but with a lower fair value of RM1.31, pegging its FY11F earnings to a PER of 15 times its three-year historical average.
Alam's 3QFY10 earnings came in at RM9 million, bringing its 9MFY10 earnings to RM47 million ' a decline of 39% year-on-year (y-o-y) on the back of a 21% drop in revenue.
The main reason for the underperformance is non-renewal of its underwater services order book. Alam is recognising current contracts which are at the tail end.
The focus now will be on consolidating this unit with a recently launched pipelay barge ' a JV with Swiber. Alam has three or four idle vessels awaiting new tenders.
We are cutting our estimates for FY10F/12F by 42% to 45% to RM61 million to RM79 million due to a weaker contribution from both the underwater services and vessel chartering divisions.
Demand for vessels in our waters will be anchored by the 21 vessels Petronas Carigali will require. Recall, 14 vessels needed next year are for deepwater works, boding well for Alam which expects delivery of two DP2 deepwater anchor handling vessels by end-this year.
Apart from Petronas Carigali's requirements, there are few others in the market: (i) rejuvenation works for Petroliam Nasional Bhd (Petronas); (ii) enhanced oil recovery services and so on; and (iii) demand from other PSCs such as Shell and ExxonMobil
With the pipelay barge ready, Alam's target is to be involved in shallow-water pipelaying works in Malaysia ' part of SapuraCrest Petroleum Bhd's 'umbrella contract'.
We believe there is a strong chance for Alam to get some slices of the available jobs because: (i) favourable demand/supply dynamics of this vessel; and (ii) the availability of the underwater unit is an added advantage over competitors.
Concerns over vessel ownership issues have been abated with the recent release of its two vessels ' Setia Ulung and Setia Aman.
Management believes the incidents were one-off and will not recur.
Alam is currently trading at a PER of 13 ' a 13% discount to its historical average of 15 times.
We believe this can be explained by: (i) concerns over litigation issues which saw its two vessels impounded but since released; and (ii) lack of news flow on new contracts. ' AmResearch, Nov 29
Company Name: ALAM MARITIM RESOURCES BHD
Research House: AMMB
Alam Maritim Resources Bhd
(Nov 29, RM1.09)
Maintain buy at RM1.09 with revised fair value of RM1.31: We reaffirm our 'buy' rating on Alam Maritim, but with a lower fair value of RM1.31, pegging its FY11F earnings to a PER of 15 times its three-year historical average.
Alam's 3QFY10 earnings came in at RM9 million, bringing its 9MFY10 earnings to RM47 million ' a decline of 39% year-on-year (y-o-y) on the back of a 21% drop in revenue.
The main reason for the underperformance is non-renewal of its underwater services order book. Alam is recognising current contracts which are at the tail end.
The focus now will be on consolidating this unit with a recently launched pipelay barge ' a JV with Swiber. Alam has three or four idle vessels awaiting new tenders.
We are cutting our estimates for FY10F/12F by 42% to 45% to RM61 million to RM79 million due to a weaker contribution from both the underwater services and vessel chartering divisions.
Demand for vessels in our waters will be anchored by the 21 vessels Petronas Carigali will require. Recall, 14 vessels needed next year are for deepwater works, boding well for Alam which expects delivery of two DP2 deepwater anchor handling vessels by end-this year.
Apart from Petronas Carigali's requirements, there are few others in the market: (i) rejuvenation works for Petroliam Nasional Bhd (Petronas); (ii) enhanced oil recovery services and so on; and (iii) demand from other PSCs such as Shell and ExxonMobil
With the pipelay barge ready, Alam's target is to be involved in shallow-water pipelaying works in Malaysia ' part of SapuraCrest Petroleum Bhd's 'umbrella contract'.
We believe there is a strong chance for Alam to get some slices of the available jobs because: (i) favourable demand/supply dynamics of this vessel; and (ii) the availability of the underwater unit is an added advantage over competitors.
Concerns over vessel ownership issues have been abated with the recent release of its two vessels ' Setia Ulung and Setia Aman.
Management believes the incidents were one-off and will not recur.
Alam is currently trading at a PER of 13 ' a 13% discount to its historical average of 15 times.
We believe this can be explained by: (i) concerns over litigation issues which saw its two vessels impounded but since released; and (ii) lack of news flow on new contracts. ' AmResearch, Nov 29
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