Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Alam Maritim Resources Bhd
(Sept 7, RM78.5 sen)
Maintain hold at 73 sen with target price of 85 sen: Offshore support vessel (OSV) hiring is gaining momentum, reflecting the improving prospects for local-flagged vessels in tandem with the intensification of Petroliam Nasional Bhd's capital expenditure programmes.
However, Alam's fleet growth remains constrained by its stretched balance sheet, impeding its earnings potential.
Maintain 'hold' with a 85 sen target price, pegged to nine times 2012 earnings per share (EPS).
Alam has secured a 3+2 year charter contract from ExxonMobil Exploration and Production Malaysia Inc for two vessels.
The contract has a value of RM220.8 million over the full five years and calls for one accommodation vessel (MV Setia Aman) and one anchor-handling tug (AHT).
Based on this and earlier contract announcements, we estimate that MV Setia Aman will be chartered out at a daily rate of at least RM70,000 and over RM30,000 for the AHT.
These rates are comparable to awards secured earlier in March and April this year (ranging from RM30,000 to RM70,000 a day).
Utilisation rates have improved although charter rates are likely to trend sideways for the next 24 months, as the market continues to absorb supply overhang in the 5,150 brake horse power (bhp) series segment.
Overall, we expect offshore marine activity to increase over the next year with the upcoming marginal and brownfield projects.
Assuming 40% gross margin, we expect this recent contract win to contribute up to RM40 million in net profit (five sen EPS) over the full five years of charter.
We retain our earnings forecasts having imputed contract wins earlier.
While we are encouraged by the size of Alam's recent contract win and financial improvement, its high gearing level is a concern, as it hampers long-term growth.
We retain our earnings forecasts and 85 sen target price. ' Maybank IB Research, Sept 7
This article appeared in The Edge Financial Daily, September 8, 2011.
Company Name: ALAM MARITIM RESOURCES BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 0.85 |
Alam Maritim Resources Bhd
(Sept 7, RM78.5 sen)
Maintain hold at 73 sen with target price of 85 sen: Offshore support vessel (OSV) hiring is gaining momentum, reflecting the improving prospects for local-flagged vessels in tandem with the intensification of Petroliam Nasional Bhd's capital expenditure programmes.
However, Alam's fleet growth remains constrained by its stretched balance sheet, impeding its earnings potential.
Maintain 'hold' with a 85 sen target price, pegged to nine times 2012 earnings per share (EPS).
Alam has secured a 3+2 year charter contract from ExxonMobil Exploration and Production Malaysia Inc for two vessels.
The contract has a value of RM220.8 million over the full five years and calls for one accommodation vessel (MV Setia Aman) and one anchor-handling tug (AHT).
Based on this and earlier contract announcements, we estimate that MV Setia Aman will be chartered out at a daily rate of at least RM70,000 and over RM30,000 for the AHT.
These rates are comparable to awards secured earlier in March and April this year (ranging from RM30,000 to RM70,000 a day).
Utilisation rates have improved although charter rates are likely to trend sideways for the next 24 months, as the market continues to absorb supply overhang in the 5,150 brake horse power (bhp) series segment.
Overall, we expect offshore marine activity to increase over the next year with the upcoming marginal and brownfield projects.
Assuming 40% gross margin, we expect this recent contract win to contribute up to RM40 million in net profit (five sen EPS) over the full five years of charter.
We retain our earnings forecasts having imputed contract wins earlier.
While we are encouraged by the size of Alam's recent contract win and financial improvement, its high gearing level is a concern, as it hampers long-term growth.
We retain our earnings forecasts and 85 sen target price. ' Maybank IB Research, Sept 7
This article appeared in The Edge Financial Daily, September 8, 2011.
No comments:
Post a Comment