Alam Maritim - Secures two replacement workboat charter BUY

Date: 
2012-05-31
Firm: 
AMMB
Stock: 
ALAM
Price Target: 
0.85
Price Call: 
BUY
Last Price: 
0.03
Upside/Downside: 
+0.82 (2733.33%)

- We maintain BUY on Alam Maritim Resources (Alam), with an unchanged fair value of RM0.85/share, pegged to an unchanged FY12F PE of 12x ' at a 25% discount to the oil & gas sector's 16x. 

- Alam has secured a contract to provide two accommodation workboats out of a letter of award to provide four such vessels to support Petronas Carigali's painting activities off Peninsular Malaysia. 

- The contract, which commenced on 25 May 2012, requires two of Alam's accommodation workboats for a primary one-year period with an option to extend for another year.

- As Alam currently has only three accommodation workboats, with the other vessel currently chartered to ExxonMobil, we understand that the group is planning to secure a third-party vessel to provide one more accommodation workboat to Petronas Carigali.

- Including the option extension, the contract value  of RM122mil translates into a charter rate of RM83,247/day, much higher compared to RM55,000-RM75,000 last year.

- We note that this is still lower compared to Alam's charter of an accommodation workboat by ExxonMobil Exploration and Production Malaysia Inc in the past three days for RM137,268/day. But we understand that the Petronas Carigali's estimated contract value does not include food catering charges for the crew.

- We maintain FY12F-FY14F net profits, which have already assumed replenishment for the expiry of vessel charters at higher rates.

- We estimate that fleet vessel utilisation rate has improved to over 80% with the vessels under the joint-ventures with CIMB and Tabung Haji having been fully chartered out. 

- We continue to expect Alam to be awarded fresh charters for its idling and spot-chartered vessels as global utilisation has tightened. We note that day rates have been slowly rising on tightening global vessel utilisation.

- As such, we maintain our view that the company's earnings recovery is intact with an undemanding valuation of FY13F PE of 7x ' at the lower end of its historical PE band.   

Source: AmeSecurities
Discussions
Be the first to like this. Showing 1 of 1 comments

ascential

Any updates on this stock? This looks like a chartering of boats company and why would so many BUY recommendations?

2012-08-07 12:05

Post a Comment