Alam Maritim Resources Bhd (Jan 30, 78 sen)
Maintain neutral at 75.5 sen with fair value of 85 sen: Last week, Alam Maritim Resources announced that its 100%-owned subsidiary Alam Maritim (M) Sdn Bhd was recently awarded a contract by Samsung Engineering (M) Sdn Bhd for the transport, installation and pre-commissioning of two pipelines, two single-point moorings and two pipeline end manifolds in connection with the Sabah Oil and Gas Terminal project (SOGT). The one-off, not renewable contract is valued at US$37 million (RM113 million). The engineering works are expected to commence immediately with completion by 3QFY12.
We have confidence in Alam securing jobs involving pipelay vessels since they are specialised vessels and there is minimal competition in the market, especially for those tailor-made to cater for Asia.
Although it has taken a long time for Alam to secure a sizable contract, we see this as earlier efforts finally bearing fruit. To recap, Alam’s management has shown good foresight in targeting jobs expected to arise from the SOGT project since October 2010, especially when it decided to sign a memorandum of understanding with Yayasan Sabah Shipping Sdn Bhd to increase its success rate in securing these jobs. This project not only contributes positively to its revenue and net profit, but also gives it valuable experience needed to improve its success rate for bidding on similar projects in the future, given its current minimal track record in utilising pipelay vessels. Also, after going up the learning curve, it would have more opportunities to bid for bigger and more complicated jobs, which could yield even better margins.
Our fair value for Alam remains unchanged at 85 sen based on the existing FY12 price-earnings ratio of 12 times. Relative to its other listed peers like Perdana Petroleum Bhd and Tanjung Offshore Bhd, we expect Alam to outperform in terms of new job order wins and quarterly earnings performance. Nevertheless, considering that Alam’s valuation is considered quite rich among its peers, we are keeping our “neutral” call for now. — OSK Research, Jan 27
This article appeared in The Edge Financial Daily, January 30, 2012.
Maintain neutral at 75.5 sen with fair value of 85 sen: Last week, Alam Maritim Resources announced that its 100%-owned subsidiary Alam Maritim (M) Sdn Bhd was recently awarded a contract by Samsung Engineering (M) Sdn Bhd for the transport, installation and pre-commissioning of two pipelines, two single-point moorings and two pipeline end manifolds in connection with the Sabah Oil and Gas Terminal project (SOGT). The one-off, not renewable contract is valued at US$37 million (RM113 million). The engineering works are expected to commence immediately with completion by 3QFY12.
We have confidence in Alam securing jobs involving pipelay vessels since they are specialised vessels and there is minimal competition in the market, especially for those tailor-made to cater for Asia.
Although it has taken a long time for Alam to secure a sizable contract, we see this as earlier efforts finally bearing fruit. To recap, Alam’s management has shown good foresight in targeting jobs expected to arise from the SOGT project since October 2010, especially when it decided to sign a memorandum of understanding with Yayasan Sabah Shipping Sdn Bhd to increase its success rate in securing these jobs. This project not only contributes positively to its revenue and net profit, but also gives it valuable experience needed to improve its success rate for bidding on similar projects in the future, given its current minimal track record in utilising pipelay vessels. Also, after going up the learning curve, it would have more opportunities to bid for bigger and more complicated jobs, which could yield even better margins.
Our fair value for Alam remains unchanged at 85 sen based on the existing FY12 price-earnings ratio of 12 times. Relative to its other listed peers like Perdana Petroleum Bhd and Tanjung Offshore Bhd, we expect Alam to outperform in terms of new job order wins and quarterly earnings performance. Nevertheless, considering that Alam’s valuation is considered quite rich among its peers, we are keeping our “neutral” call for now. — OSK Research, Jan 27
This article appeared in The Edge Financial Daily, January 30, 2012.
