More in the bag for Alam Maritim
by Jasmine Chin, jasminechin@theborneopost. Posted on September 22, 2011, Thursday
SMOOTH SAILING: The photo captures one of Alam Maritim’s offshore support vessels. Its recent RM22.1 million contract award demonstrates its ability in attracting further long-term contracts.
To recap, the group announced that 100 per cent subsidiary, Alam Maritim (M) Sdn Bhd had received a letter of award from a local oil and gas company for the provision of one straight vessel for RM22.1 million.
The contract, which was slated to commence on July 24 this year, was due for a primary period of 28 months, but had so far no specific provision for any extension.
The procurement of the recent vessel according to OSK Reseach Sdn Bhd (OSK Research) demonstrated the group’s competency in attracting long-term contracts, especially since the global economy was facing a potential slowdown for the coming year.
The tone of optimism was echoed by AmReseach Sdn Bhd (AmResearch) which believed that the group should be awarded sizeable long-term charter contracts whereby a few of its spot contracts would be ‘converted’ into long-term charters.
Apart from winning the RM22.1 million contract, the group was also aggressively bidding for more offshore, installation and construction (OIC) jobs and might potentially be awarded a sizeable pipe-laying contract by the end of this year.
Analysts from HwangDBS Vickers Research Sdn Bhd (HwangDBS Research) were also positive on this long-term charter as it anticipated the group to fetch a daily charter rate of RM26,300.
Though the rate was below the recent peak rates prior to the 2008 financial upheaval, analyst nonetheless viewed it to be decent. This was owing to the current operating environment where there was still an oversupply of vessels owing to the protracted slowdown in the oil and gas (O&G) sectors following the downturn in the global economy.
“Its fleet utilisation is expected be higher than 85 per cent at this juncture with 60 per cent of the charters under long-term contracts.
“We remain positive on Alam Maritim’s strong earnings recovery in the second half of this year as it has turned around since the second quarter of this year (2Q11) and the new contracts awarded recently should contribute strongly by 4Q11,” opined HwangDBS Research.
This season was a strike contrast to its first quarter where it had suffered net losses of RM7.38 million in the first quarter of financial year 2011 (FY11) ended March 31.
Revenue then fell 48 per cent to RM34.68 million from RM66.87 million. Loss per share was 0.9 sen compared with earnings per share of four sen.
Its cash and cash equivalentsat end of March 31 this year declined to RM94.35 million compared with RM167.15 million. Net cash generated from operating activities shrank to RM4.38 million from RM52.68 million.
The losses were mainly premised on the weaker performance by its offshore support vessel segment.
However, as soon as its subsidiary unit secured the RM22.1 million contract, its share rose in early trade yesterday and has been listed as one of the ‘stocks to watch’ in the Bursa Malaysia list.
Alam Maritim as highlighted by AmResearch had the strategic assets to support the robust oil and gas activity and its recent foray into the OIC segment would propel the group into a more complete O&G services company.
The company has so far secured RM274 million worth of chartering contracts since July 11, thus reaffirming the pick-up in O&G contracts after the heavy news flow on fabrication contracts in Malaysia since late last year.
AmResearch and HwangDBS Research pegged Alam Maritim at a price of RM0.77. OSK Research on the other hand pegged the price at RM0.79.
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