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.
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Showing posts with label Alam Maritim. Show all posts
Showing posts with label Alam Maritim. Show all posts
Saturday, 21 February 2009
Saturday, 21 June 2008
Alam Maritim - BUY - 21 May 2008
Alam Maritim Resources - Slow start to the year but still bullish (Results Note)
Price: RM2.10
Target Price: RM3.32
Recommendation: BUY
· 1QFY08 net profit of RM11.2m was below expectations and consensus at 16% of our earnings estimate of RM71.3m and consensus estimate of RM70.7m. Alam Maritim Resources ("AMRB") recognised only RM7.6m in revenue and RM1.6m in gross profit from charter of 3rd party vessels and RM1.0m in ESOS share based payment.
· Management represented that contributions from charter of 3rd party vessels was below its historical range of RM20.0m to RM30.0m in revenue and RM4.0m to RM6.0m in gross profit due to abnormally strong monsoon rainfall in 1QFY08 leading to decreased short term charter of 3rd party vessels.
· AMRB still recorded YoY growth. 1QFY08 net profit of RM11.2m was 33% lower QoQ due to the aforementioned factors but still 10% higher YoY higher due to contributions from charter of own vessels which command more than 50% gross margins compared to charter of 3rd party vessels which command approximately 20% gross margins.
· No downgrade in earnings estimates. The strong monsoon rainfall in 1QFY08 has subsided and contributions from charter of 3rd party vessels should resume to historical levels from hereon onwards. In addition, AMRB will take delivery of eight vessels this year. We are confident that our full year FY08E net profit of RM71.3m will be realised if not exceeded.
· Due to >US$100/bbl crude oil, we understand from other offshore support vessel operators that the long term average daily charter rate for Malaysian flagged AHTS has increased from US$2.00/bhp to US$2.60/bhp. In addition, AMRB will take delivery of four vessels by FY10. Growth will be driven by fleet count growth AND higher charter rate reversions.
· Reiterate BUY call and RM3.32 target price based on DCF valuation method utilising 5% terminal growth rate and 12% WACC. RM3.32 implies an undemanding 16x FY09E PER and 15x FY11E PER (when all thirty four vessels operate on full year bases).
· We continue to like AMRB for its robust earnings growth potential, high earnings visibility and 'easy to understand' business model. It is also a good hedge against high crude oil prices as higher crude oil prices translate into larger budgets for oil majors to pay higher charter rates.
KENANGA INVESTMENT BANK BERHAD (15678-H)
Price: RM2.10
Target Price: RM3.32
Recommendation: BUY
· 1QFY08 net profit of RM11.2m was below expectations and consensus at 16% of our earnings estimate of RM71.3m and consensus estimate of RM70.7m. Alam Maritim Resources ("AMRB") recognised only RM7.6m in revenue and RM1.6m in gross profit from charter of 3rd party vessels and RM1.0m in ESOS share based payment.
· Management represented that contributions from charter of 3rd party vessels was below its historical range of RM20.0m to RM30.0m in revenue and RM4.0m to RM6.0m in gross profit due to abnormally strong monsoon rainfall in 1QFY08 leading to decreased short term charter of 3rd party vessels.
· AMRB still recorded YoY growth. 1QFY08 net profit of RM11.2m was 33% lower QoQ due to the aforementioned factors but still 10% higher YoY higher due to contributions from charter of own vessels which command more than 50% gross margins compared to charter of 3rd party vessels which command approximately 20% gross margins.
· No downgrade in earnings estimates. The strong monsoon rainfall in 1QFY08 has subsided and contributions from charter of 3rd party vessels should resume to historical levels from hereon onwards. In addition, AMRB will take delivery of eight vessels this year. We are confident that our full year FY08E net profit of RM71.3m will be realised if not exceeded.
· Due to >US$100/bbl crude oil, we understand from other offshore support vessel operators that the long term average daily charter rate for Malaysian flagged AHTS has increased from US$2.00/bhp to US$2.60/bhp. In addition, AMRB will take delivery of four vessels by FY10. Growth will be driven by fleet count growth AND higher charter rate reversions.
· Reiterate BUY call and RM3.32 target price based on DCF valuation method utilising 5% terminal growth rate and 12% WACC. RM3.32 implies an undemanding 16x FY09E PER and 15x FY11E PER (when all thirty four vessels operate on full year bases).
· We continue to like AMRB for its robust earnings growth potential, high earnings visibility and 'easy to understand' business model. It is also a good hedge against high crude oil prices as higher crude oil prices translate into larger budgets for oil majors to pay higher charter rates.
KENANGA INVESTMENT BANK BERHAD (15678-H)
Tuesday, 4 March 2008
HLG: 29 Feb Alam Maritim - Results above-expectation
Alam Maritim Resources BUY
Price target RM2.70
Share price at 28 Feb RM2.12
Investment summary
FY07 earnings were 12-16% ahead of HLG/consensus estimate, due to higher-than-expected vessel utilization rates during the year. We raise Alam from a HOLD to a BUY: (1) recent -14% share price decline is unwarranted given resilient vessel charter rates; (2) valuations are attractive, at 14x FY08 PE and above-market 27% EPS CAGR over FY07-09E, purely on the basis of scheduled vessel deliveries and current spot charter rates. We remain positive on O&G vessel owner/operators sector: (1) charter rates continue to remain strong with new-builds lagging behind replacement market (2) the number of Malaysian flagged vessels is way below Petronas domestic demand.
Upgrade to BUY
Share price has fallen 25% from its Nov07 peak, despite near-term positives: (1) 50% fleet expansion in 2008; (2) charter rates have been consolidating since Q307, and could resume its upward trend by mid-yr.
Price target RM2.70
Share price at 28 Feb RM2.12
Investment summary
FY07 earnings were 12-16% ahead of HLG/consensus estimate, due to higher-than-expected vessel utilization rates during the year. We raise Alam from a HOLD to a BUY: (1) recent -14% share price decline is unwarranted given resilient vessel charter rates; (2) valuations are attractive, at 14x FY08 PE and above-market 27% EPS CAGR over FY07-09E, purely on the basis of scheduled vessel deliveries and current spot charter rates. We remain positive on O&G vessel owner/operators sector: (1) charter rates continue to remain strong with new-builds lagging behind replacement market (2) the number of Malaysian flagged vessels is way below Petronas domestic demand.
Upgrade to BUY
Share price has fallen 25% from its Nov07 peak, despite near-term positives: (1) 50% fleet expansion in 2008; (2) charter rates have been consolidating since Q307, and could resume its upward trend by mid-yr.
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