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Monday, February 21, 2011

ALAM - Looking Forward to 2011 (OSK)

Alam expects to announce its results this week, which we gather would likely be within or below expectations, depending on whether management will be making any provisions for the amount owed by Vastalux. Having said that, we see a better FY11 for the company as it has the right asset mix, which puts it in a good position to ride on the current O&G focus on existing and marginal oil field developments. Maintain Buy.

Our target price for Alam remains unchanged at RM1.50 based on a PER of 15x FY11earnings. Although investors may be uncomfortable with the negative news flow on Vastalux, we believe that this unfortunate event would probably have been built into its current share price, and that investors should turn to the company’s longer term outlook instead.

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