Alam Maritim - BUY - 12 Aug 2008

Alam Maritim Resources - 2Q08 Results in line (Results Note)



Price: RM2.00

Target Price: RM3.29

Recommendation: BUY



· Results are very much in line with expectations. While 6M08 top line of RM139m and net profit of RM30.5m accounts for a mere 44% of our full year's forecast, we consider them to be in line given an expected pick up in the second half of the year.

· QoQ, revenue jumped 52.1% while net profit was higher at 72.6%. The strong quarter is very much underpinned by higher chartering activities (+45%) and under water services (+92%), a reflection of the strong underlying market conditions.

· YoY, revenue was up 72% while net was even higher at 90.4% with margins continuing to improve on higher rates and an expansion of its charter services as opposed to third party charters.

· Outlook remains robust despite the recent oil price correction. With capital expenditure unlikely to be affected by the short term volatility in oil prices, demand for offshore support services is expected to be robust.

· Forecast and BUY is maintained. We continue to remain bullish on the offshore services sector with demand likely to be robust on account of higher exploration and production activities across the globe. Target price of RM3.29 based on DCF is maintained for the time being as we ponder possible alternative valuation methodology.