Stock Watch: Will Alam Maritim get Pan Malaysia subcon job?

KUALA LUMPUR (Apr 21): Will offshore oil & gas service provider Alam Maritim Resources Bhd get the subcontract work from the RM10 billion Pan Malaysia offshore transportation and installation (T&I) job?

This is the question the oil and gas sector is asking after the Pan Malaysia T&I job was awarded to Barakah Offshore Petroleum Bhd, Puncak Niaga Holdings Bhd and SapuraKencana Petroleum Bhd.

“It is unlikely Alam Maritim will be the subcontractor,” one analyst told theedgemalaysia.com.

“But, if at all the firm becomes a subcontractor, it will only enjoy a thin slice of the T&I job,” the analyst added over the telephone.

AmResearch in a note today said it was uncertain of the actual sub-contracting jobs that could be up for offer, given SapuraKencana’s additional vessels and Puncak’s earlier joint venture (JV).

“We are uncertain as SapuraKencana will be taking delivery of two new construction vessels while Puncak Oil & Gas had earlier teamed up with Leighton Holdings in the earlier tender process,” said analyst Alex Goh of AmResearch.

Goh noted if there were any subcontracting works for Alam Maritim, it would only likely to materialise in the third quarter of this year.

The Edge Weekly this week reported that Alam Maritim has been in discussion with Barakah, Puncak Niaga and SapuraKencana to become their subcontractor for their RM10 billion T&I job.

But there was no indication in the report of Alam Maritim's chances following these discussions.

In December last year, the three firms were awarded four packages for the T&I job by Petroliam Nasional Bhd (Petronas). Alam Maritim did not secure the contract.

But at 4.19 pm today, Alam Maritim gained 12 sen or 7.7% to RM1.67, after the Edge Weekly report. The stock saw some 27 million shares traded. It had earlier hit a high of RM1.68.

Although AmResearch was doubtful if Alam Maritim would get the sub-contractor work, it stayed positive on the group’s further expansion into the underwater services.

Alam Maritim hopes to secure parts of the RM1.2 billion to RM1.5 billion contracts, noted the research house.

Analyst Goh said he maintained his ‘buy’ call on the stock with unchanged fair value of RM2.05 – higher than the current market price of the stock.

Meanwhile, CIMB Investment Bank Research said if successfully secured, the subcontracting works might boost Alam Maritim’s earnings per share by 12%, 22% and 22% for FY14, FY15 and FY16 respectively.

“But for now, we maintain our earnings forecasts and target price of RM2.00. We also retain a buy call on the stock,” said analyst Norziana Mohd Inon of CIMB IB.

Source