Alam Maritim - undervalue

Its net profit for the nine months period ended Sept 30 (FY2013) of rm73 million came in above market observers expectations.

The group’s third quarter 3Q of FY2013 revenue surged 2.4 times to rm180 million largely due to recognition of charters undertaken by third party vessels, as well as higher utilization of Alam Maritim’s own fleet. However its net profit fell by 26% quarter on quarter to rm22 million as the margins for third party vessels are lower than that of the group’s own assets.

Its 9MFY2013 revenue rose 4% year on year to rm347 million due to higher utilization of the group’s own fleet.

Net profit surged much higher by 88% year on year to rm73 million due to higher charter rates and utilization of the group’s vessels, third party vessels and recognition of subsea and underwater installation and construction work.

However its 4QFY2013 may be weaker quarter to quarter.

With 16 charters for AHTS and straight supply vessels secured so far in 2013, the group’s vessel utilization rate for its wholly owned fleet has risen quarter to quarter from 70% to 80% currently (Nov 2013) with the rest of the vessels on spot charters.

Year to Nov 2013, it has secured contracts worth rm1.278 billion of which 81% are marine charters for vessels that are either wholly owned, under JV’s or for the third parties. Its current order book of rm1.3 billion has surpassed its 2008 peak of rm1.1 billion.

It hopes to secure rm1.2 billion to rm1.5 billion worth of contracts for underwater services, which were earlier extended to Offshore Works Group Sdn Bhd, currently (Nov 2013) in finalization distress.

Additionally the group hopes to secure part of the concessions for Package A of the Pan Malaysian transport and installation umbrella contract, which may be potentially worth rm400 million annually.

In terms of valuations, it is trading at a PER of 10 times FY2014 … way below the oil and gas sector of 17 times.