Institutional Sales Department 26 Jul 2012
ALAM MARITIM RESOURCES BHD (ALAM) RM0.53
Market Cap: RM606.2mil
Paid up cap: 787.2mil @ RM0.25
NAV: 62sen
Cash: RM116.2mil
Borrowings: RM581.5mil (net gearing 95.1%)
OSV Segment
-
OSV fleet utliisation
is currently at 75%, with rates stable around USD2/bhp per day. OSV provide a
steady income of RM15 per Quarter.
-
Alam sees demand for
accommodation barges and is lobbying to supply another barge for the North
Malay Basin with day rate of USD40k/day. Recent contract won from Exxon for
Tapis was around USD35k/day.
OIC (Offshore, Installation, Construction) Segment
-
Orderbook is RM180mil
with RM120mil from SOGT. Latest contract won is the 60days + 30 days extension
RM10Mil contract from Sapura for bareboat charter of its pipelay barge. This is
a subcontract work under Petronas program for Sabah waters.
-
Shell Sarawak
contract worth RM30mil won in dec 2011 was part of 9 packages with package 2
expected to be awarded in Aug/Sept. Alam only breakeven for first job but being
incumbent would provide them better chances to bag the next job which is
estimated at RM30-50mil.
IRM (Inspection, Maintenance, Repair) Segment
-
Petronas Umbrella
program, which are due for renewal has passed the technical stages. Contract value
is estimated at RM1.2-1.4bn.
-
Main competitors are
Allied Marine which is the incumbent. Management believe they have a fair
change to snare at least a package given Petronas’s decision not to take up the
option to extend existing contract for a further 2 years with contract award
possibly in 3Q
Other Development
-
Alam has gotten its license
to operate in the Saudi region from Saudi Aramco. Alam is pairing with a local
party to tender for underwater IRM jobs worth RM1bn.
-
Alam is considering
selling some of its vessels which they jointly own to lock in profits and
potentially purchase new assets such as Accommodation barge or a jackup rig.
Locally owned rigs are in demand as Government intends to replace foreign rigs.
-
Purchases could be
finance by convertible bonds as well.
Earnings
-
2Q result will be
announced on the 14-15th Aug with net profit around 14-15mil (first draft).
Expecting full year around RM70mil (6xFY12PE). Bulk of the earnings is from OSV
which contributes RM15mil. Key risk is the OIC division which could face
further delay from SOGT with burn rate of RM2mil per month.
Key Risk
-
Delay in long term
contracts for OSV or spot chartered vessels not renewed.
-
Failure in win
contracts under Petronas Umbrella for OIC and IRM segment
Valuations
-
OSV segment remains the core earning generator with company guidance PBT
of RM15mil/Quarter. Net profit is estimated RM70mil valuing Alam at 6xFY2012PE.
P/B at 0.8x is at its all-time low. We believe there is limited downside. Buy