Alam Maritim… dated Jan 2013

It owns a young fleet of 44 OSVs with the average of 4.5 years is riding the wave of contracts in the O&G sector.

The latest contracts are expected to boost the company’s utilization rate to above 80%. The rising demand coupled with limited supply has jacked up charter rates which augurs well for vessel operators like Alam Maritim.

It has secured a RM576mil contract from Petronas Carigali Sdn Bhd to provide six marine vessels. The RM576mil included an extension option, if exercised. The contract, which has taken effect from Jan 1, 2013 to Dec 31, 2017 is for a firm period of five years. The contract was expected to positively contribute to the group's earnings and net assets for the financial years ending Dec 31, 2013 and beyond.

Its balance sheet as at Sept 30 2012 showed that Alam Maritim had borrowings of rm561 million and a cash pile of rm111 million.

To sustain its share price momentum (Jan 2013), it needs to clinch contracts for its offshore installation and construction and subsea business divisions. If it ails to do so, the company’s earnings growth will be jeopardised because of the OIC division may sink into losses of no new contract is secured in the near future.
The risk remains with its OIC and subsea businesses.

The existing contract will expire in April 2013 and if the company lands no new contracts after that, it will incur losses of rm3 million to rm4 million a month as it still has pay divers and all. The losses will offset the bullishness of its OSV division.

Towards the end of 1QFY2013, we may see profit taking if the company does not secure any contract for its OIC and subsea businesses as earnings growth is not going to be great then.

However it is beefing up its orderbook for OIC

Outside Malaysia, Alam Maritim has been invited to submit bids for Middle Eastern and African jobs.