Alam Maritim - BUY - 19 Feb 2009

Alam Maritim Resources – 4QFY08 results spot on (Results Note)

Price: RM0.685
Target Price: RM1.11
Recommendation: BUY

· Alam’s 4QFY08 results slightly surpassed both our and consensus’ expectations. Net profit of RM76.4mil was 1% above our RM75.9m and 8% above the consensus of RM 71m.
· QoQ, revenue grew 2.2% to RM110.1mil, while net profit dipped 2.0%, to RM22.7mil. While top line remained strong given locked in charters, net margins were however lower due to hike in operating expenses with recognition of forex losses given Group’s foreign denominated term loan and provision for doubtful debts (+ 161.8% QOQ).

· YoY, revenue increased by a significant 43%, reflected correspondingly with net profit increase of 35.5%, product of the year’s higher daily charter rates, expanded fleet of vessels (FY07 22; FY08 28) and its upcoming underwater services division, of which its net profit increased YOY YTD by a whopping 171.0%.

· We maintain our earnings estimates FY09 and FY10 going forth. As at December 08, order book of RM550mil should sustain earnings throughout FY09.
Maintain BUY but lower target price to RM 1.11 (Previous RM1.27) as we ascribe a lower PER of 7.0x (vs 8.0x previously) as multiple compressed for the sector. We continue to like Alam for its young and extensive fleet, its proven execution capabilities and its’ undemanding valuation at 4.4x PE valuation.