Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: AMMB
Alam Maritim Resources Bhd
(March 2, 87 sen)
Maintain buy at 90 sen with fair value of RM1.31: We reaffirm our 'buy' rating on Alam Maritim Resources Bhd with an unchanged fair value of RM1.31 based on an FY11F price-earnings ratio (PER) of 15 times.
Our 'buy' rating is underpinned by three key points: (i) Strong rebound in earnings expected for FY11F (+74% year-on-year) as FY10 earnings were affected by bad debt provision and an inactive oil and gas sector; (ii) Stronger roll-out of oil and gas contracts; and (iii) Further upside from possibly sizeable offshore, installation and construction (OIC) contracts.
Alam announced on March 1 that it had been awarded an extension of contract for the provision of an accommodation work barge for RM71 million. We understand the vessel will be chartered for 21 months with an option to extend for an additional year.
Based on this contract value, the daily charter rate awarded works out to about US$37,000 (RM112,000) per day. The rate awarded is higher (+12%) than what Alam received last year for its accommodation work barge. We are not changing our estimates as we have assumed a renewal to this vessel at about RM110,000 per day.
On the flip side, despite the marginal field hype, Alam would rather be on the sidelines at this juncture. The group is cautious about the development of marginal fields especially since it is relatively new for Malaysia's oil and gas sector.
Nonetheless, the group would be participating indirectly via the supply of offshore support vessels. Recall that Petronas Carigali requires 15 vessels in the near term mostly to support the development of the marginal field works. We understand Alam has submitted a few of its vessels for this tender.
While its maiden pipe-lay barge ' co-owned with Swiber ' has been delivered, Alam is still looking for OIC jobs, one of which is an 'umbrella' contract for shallow water pipe-laying works.
Alam has an added advantage, it can consolidate its underwater services while a memorandum of understanding signed with Yayasan Sabah earlier would enhance its chances of getting jobs especially in Sabah waters. ' AmResearch, March 2
This article appeared in The Edge Financial Daily, March 3, 2011.
Company Name: ALAM MARITIM RESOURCES BHD
Research House: AMMB
Alam Maritim Resources Bhd
(March 2, 87 sen)
Maintain buy at 90 sen with fair value of RM1.31: We reaffirm our 'buy' rating on Alam Maritim Resources Bhd with an unchanged fair value of RM1.31 based on an FY11F price-earnings ratio (PER) of 15 times.
Our 'buy' rating is underpinned by three key points: (i) Strong rebound in earnings expected for FY11F (+74% year-on-year) as FY10 earnings were affected by bad debt provision and an inactive oil and gas sector; (ii) Stronger roll-out of oil and gas contracts; and (iii) Further upside from possibly sizeable offshore, installation and construction (OIC) contracts.
Alam announced on March 1 that it had been awarded an extension of contract for the provision of an accommodation work barge for RM71 million. We understand the vessel will be chartered for 21 months with an option to extend for an additional year.
Based on this contract value, the daily charter rate awarded works out to about US$37,000 (RM112,000) per day. The rate awarded is higher (+12%) than what Alam received last year for its accommodation work barge. We are not changing our estimates as we have assumed a renewal to this vessel at about RM110,000 per day.
On the flip side, despite the marginal field hype, Alam would rather be on the sidelines at this juncture. The group is cautious about the development of marginal fields especially since it is relatively new for Malaysia's oil and gas sector.
Nonetheless, the group would be participating indirectly via the supply of offshore support vessels. Recall that Petronas Carigali requires 15 vessels in the near term mostly to support the development of the marginal field works. We understand Alam has submitted a few of its vessels for this tender.
While its maiden pipe-lay barge ' co-owned with Swiber ' has been delivered, Alam is still looking for OIC jobs, one of which is an 'umbrella' contract for shallow water pipe-laying works.
Alam has an added advantage, it can consolidate its underwater services while a memorandum of understanding signed with Yayasan Sabah earlier would enhance its chances of getting jobs especially in Sabah waters. ' AmResearch, March 2
This article appeared in The Edge Financial Daily, March 3, 2011.
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