HLG: Alam Maritim - No surprises; Maintain BUY (12 August 2008)

Alam Maritim BUY


Price target RM2.60



Share price at 11 Aug RM2.00



Investment summary
YTD Q208 net profit of RM30m was 43% of HLG forecast and consensus estimate. We expect H208 to be better with the delivery of seven more vessels by end of FY08. Alam Maritim (AMRB) also proposes to acquire 35acres of water fronting land in Melaka to service its vessels. We think the deal will be positive in the long run to maintain its growing fleet of vessels.

We are positive on the oil and gas support vessels segment: (1) recent award of multi-year charter contracts by Petronas re-affirm our view that charter rates will hold for the next 3-4 years; (2) vessel supply-demand remains tight given that shipbuilding yards are filled with orders up to 2011/12.



BUY ahead of deliveries

Aggressive fleet expansion from 20 vessels in Dec07 to 32 vessels by end FY08 will drive 40% EPS growth. Flat share price performance in the last four months offers an excellent opportunity to accumulate. Share price (-16% YTD) trades at 10x FY09E, 20% discount to sector peers.