Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: AFFIN
Alam Maritim Resources Bhd
(June 14, RM1.09)
Maintain buy at RM1.08 with revised target price RM1.25 (from RM1.22): Alam Maritim announced that its wholly owned subsidiary Alam Maritim (M) Sdn Bhd had recently received a purchase order from Samsung Engineering Malaysia Sdn Bhd to supply engineering work, supply of materials, fabrication, load-out and commissioning of two units of single point mooring buoy for Sabah Oil and Gas Terminal (SOGT) project.
The contract value is approximately US$18 million (RM54.5 million) and Alam Maritim expects to commence work immediately, with a target completion by 1QFY12.
We are pleasantly surprised with the contract win ' we believe this is Alam Maritim's first contract win outside its core business operations in the chartering of offshore marine vessels and provision of underwater services.
The contract win is broadly in line with management's intention to move up the value chain, though we were expecting Alam Maritim to focus on provision of installation services rather than fabrications. We believe it is likely to work with third party contractors for the fabrication works for these two single point mooring buoys.
Assuming an earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 8%, we have raised Alam Maritim's FY11 and FY12 net profit forecast by 2%-4% to RM49.3 million and RM81.1 million respectively. We view this contract as a one-off and do not assume further EPCC contract wins in our current forecast horizon.
In tandem with our earnings upgrade, we have also lifted our target price for the stock to RM1.25 (from RM1.22) based on an unchanged 12 times CY12 PE. Maintain 'buy' on Alam Maritim.
Key re-rating catalysts are the award of SOGT pipelaying work, award of long-term charter contracts at attractive rates and stronger-than-expected quarterly earnings recovery. To recap, we have inputed in our forecasts the award of the SOGT pipelaying work ' a US$50 million-US$60 million contract that is likely to be awarded to Alam-YSS JV company in the form of a lump sum contract to be completed in two to four months.
Under the contract, Alam Maritim is likely to provide a pipelay barge and four OSVs for the pipelay operations. ' Affin IB Research, June 14
This article appeared in The Edge Financial Daily, June 15, 2011.
Company Name: ALAM MARITIM RESOURCES BHD
Research House: AFFIN
Alam Maritim Resources Bhd
(June 14, RM1.09)
Maintain buy at RM1.08 with revised target price RM1.25 (from RM1.22): Alam Maritim announced that its wholly owned subsidiary Alam Maritim (M) Sdn Bhd had recently received a purchase order from Samsung Engineering Malaysia Sdn Bhd to supply engineering work, supply of materials, fabrication, load-out and commissioning of two units of single point mooring buoy for Sabah Oil and Gas Terminal (SOGT) project.
The contract value is approximately US$18 million (RM54.5 million) and Alam Maritim expects to commence work immediately, with a target completion by 1QFY12.
We are pleasantly surprised with the contract win ' we believe this is Alam Maritim's first contract win outside its core business operations in the chartering of offshore marine vessels and provision of underwater services.
The contract win is broadly in line with management's intention to move up the value chain, though we were expecting Alam Maritim to focus on provision of installation services rather than fabrications. We believe it is likely to work with third party contractors for the fabrication works for these two single point mooring buoys.
Assuming an earnings before interest, tax, depreciation and amortisation (Ebitda) margin of 8%, we have raised Alam Maritim's FY11 and FY12 net profit forecast by 2%-4% to RM49.3 million and RM81.1 million respectively. We view this contract as a one-off and do not assume further EPCC contract wins in our current forecast horizon.
In tandem with our earnings upgrade, we have also lifted our target price for the stock to RM1.25 (from RM1.22) based on an unchanged 12 times CY12 PE. Maintain 'buy' on Alam Maritim.
Key re-rating catalysts are the award of SOGT pipelaying work, award of long-term charter contracts at attractive rates and stronger-than-expected quarterly earnings recovery. To recap, we have inputed in our forecasts the award of the SOGT pipelaying work ' a US$50 million-US$60 million contract that is likely to be awarded to Alam-YSS JV company in the form of a lump sum contract to be completed in two to four months.
Under the contract, Alam Maritim is likely to provide a pipelay barge and four OSVs for the pipelay operations. ' Affin IB Research, June 14
This article appeared in The Edge Financial Daily, June 15, 2011.
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