Yesterday, Alam announced that its 100%-subsidiary, Alam Maritim (M) SB, recently received an award from Sarawak Shell Bhd for the E8 and F13K modules offshore transportation and installation contract estimated at RM29.8m. The non-renewable contract, which is for a period of 9 months, commenced in 4Q11 and is expected to be completed by May 2012.
Outperforming its peers. In comparison with other listed vessel operators like Perdana Petroleum, Petra Energy and Tanjung Offshore, we see Alam outperforming its peers in terms of new contracts as well as quarterly earnings performance. In 4QFY10, Alam fell into the red with a net loss of RM46.5m, dragged down by provisions for Vastalux and remained in the red in 1QFY11 with a net loss of only RM6.8m although this was a significant improvement over the preceding quarter. In 2QFY11, the company managed to chalk up a net profit of RM7.0m, making further improvement in 3QFY11 with a net profit of RM13.4m on the back of better vessels utilization. Meanwhile, the results of its peers over those periods were mostly flat or were in red ink quarter after quarter as a result of poor vessels utilization and dearth of new contract awards.
But still a Neutral. Although we think Alam is out-performing its peers, this development has been partly factored into its share price valuation. Hence, our Neutral call and fair value for Alam remain unchanged at RM0.85, based on the existing PER of 12x FY12 EPS.
Outperforming its peers. In comparison with other listed vessel operators like Perdana Petroleum, Petra Energy and Tanjung Offshore, we see Alam outperforming its peers in terms of new contracts as well as quarterly earnings performance. In 4QFY10, Alam fell into the red with a net loss of RM46.5m, dragged down by provisions for Vastalux and remained in the red in 1QFY11 with a net loss of only RM6.8m although this was a significant improvement over the preceding quarter. In 2QFY11, the company managed to chalk up a net profit of RM7.0m, making further improvement in 3QFY11 with a net profit of RM13.4m on the back of better vessels utilization. Meanwhile, the results of its peers over those periods were mostly flat or were in red ink quarter after quarter as a result of poor vessels utilization and dearth of new contract awards.
But still a Neutral. Although we think Alam is out-performing its peers, this development has been partly factored into its share price valuation. Hence, our Neutral call and fair value for Alam remain unchanged at RM0.85, based on the existing PER of 12x FY12 EPS.
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