KUCHING: Alam Maritim Resources Bhd (Alam Maritim) announced that its 100 per cent subsidiary, Alam Maritim (M) SB received letters of award from an independent oil and gas exploration and production company.
Research house OSK Research Sdn Bhd (OSK), in a research report, noted that the short term contracts were for the provision of one anchor handling tug supply (AHTS) and one fast multipurpose supply vessel for a total consideration of RM24.2 million.
OSK viewed these developments as positive news but did not change to its forecast for the financial year 2011(FY11). This was because OSK’s earlier assumptions that Alam Maritim’s vessels would have contracts based on management’s guided utilisation rate of about 70 per cent.
In OSK’s view, what was more important for the vessel operators based on the current operating environment was to boost their utilisation rates, rather than getting higher charter rates.
This in turn was because any incremental gain in the charter rate of about 10 per cent to 20 per cent would still be insignificant compared with bearing the cost of an unutilised vessel, which OSK estimated would make up about 50 per cent of the charter rate.
Hence, due to the scarcity of new vessel contracts, it was important that vessel operators get their vessels sailing and out of the dock.
Although the company was gradually recovering from the unfavorable offshore support vessel market due to the lack of new vessel contracts, OSK believed that the company’s outlook should brighten going forward, especially given that the development of marginal oilfields would give rise to the need for more of its vessels.
Furthermore, the research team noted that Alam Maritim had fully provided for Vastalux Energy Bhd’s potential doubtful debt in the fourth quarter FY10 and hence it deduced that no more write-downs were required that could adversely affect its FY11 results going forward.
Based on the existing price earnings ratio of 15 times for FY11 earnings per share, OSK’s target price for Alam Maritim remained unchanged at RM1.50 compared with the last traded price of RM1.01 per share.