Company Update � Alam Maritim (BUY,
maintain)
- Subsea and OIC business gaining momentum
Alam plans to acquire a diving support vessel (DSV)
under a JV agreement with an existing asset owner. Alam will only need a
capital outlay of RM40m to fund the purchase of US$80m DSV. The chartering
cost of a DSV (currently in the range of US$80,000-120,000/day) typically
accounts for up to 75% of the subsea IRM operating cost. The proposed
acquisition is a timely expansion to secure a bigger pie of the upcoming
RM2bn domestic subsea IRM contracts. We raised our 2015-16E net profit
forecast by 18-19% and EPS forecast by 2-3% after factoring in higher charter
income from the new DSV, higher OIC & subsea earnings, lower net interest
expenses, and 15% dilution impact from the issuance of new shares. We rolled
forward our valuation basis to 2015 and raised our TP to RM2.10 (from RM1.83)
based on an unchanged 14x forward PER. Maintain BUY.
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