ALAM Maritim’s sustainability depends on earnings achievement

KUCHING: There may be a possibility that Alam Maritim Resources Bhd’s (Alam Maritim) share price rising in the immediate term while the company’s long-term sustainability would still depend on its earnings achievement and major positive corporate activities going forward.

LIQUIDATED HOLDINGS: OSK Research believes that some of its shareholders may decide to liquidate part of their holdings after the ex-date which will help to generate liquidity in the shares and provide buying opportunities for potential shareholders who may be interested to get some exposure to the O&G vessel business.

According to OSK Research Sdn Bhd (OSK Research), the ex-date for Alam Maritim’s one-for-two bonus issue had been set for Thursday, July 15, 2010. Alam Maritim’s proposed issuance of up to 272.5 million bonus shares would enlarge its share capital to 781 million shares from the existing base of 508.5 million shares.

The research house said that historically, Alam Maritim’s shares were not very liquid, with the latest three-month average volume of about 0.3 million only. The bulk of its shares was controlled by its major shareholder, SAR Venture Holdings Sdn Bhd, which had a 50.1 per cent equity interest in the company. The next substantial shareholder was Tabung Haji, with a 9.5 per cent equity stake, while the rest of its shareholding was quite fragmented, with less than five per cent of the company’s shares.

OSK Research believed that some of its shareholders might decide to liquidate part of their holdings after the ex-date which would help to generate liquidity in the shares and provide buying opportunities for potential shareholders who might be interested to get some exposure to the oil and gas (O&G) vessel business.

Besides the news flow related to the bonus issue, the research house also gathered from management that there had been a slight delay in the delivery of its pipe lay barge, which was supposed to be ready in June. Nevertheless, it understood that the barge was now in Singapore and was awaiting the arrival of pipe lay equipment from Europe.

OSK Research stated that although the barge was Malaysian flagged, management did not expect its use to be limited to Malaysian waters as it would accept jobs on a first come first serve basis. Currently, it did not have a contract in hand but would aggressively look for one once the barge was ready for commissioning. It added that there was no chance to its financial year 2010 (FY10) forecast as it had only factored in the earnings contribution from this barge starting from the fourth quarter of the financial year 2010 (4QFY10).

The research house’s ex-bonus fair value would be revised downwards to RM1.99 per share while the theoretical share price would adjust to an ex-bonus price of RM1.20 per share, based on Monday’s closing price of RM1.80 per share. This provided an upside of some 65.8 per cent. Also, its valuation for the company remained unchanged at a price earnings ratio (PER) of 12 times financial year 2011 (FY11) earnings.

Going forward, OSK Research continued to like Alam Maritim’s sound strategy of penetrating new businesses and new geographical markets such as Middle East and India.


by Borneo Post