Alam Maritim: Maintain buy, target price unchanged RM1.502011/04/16 OSK Research believes Alam Maritim Resources Bhd's (5115)outlook should brighten going forward as development of marginal oilfields would raise the need for more vessels. It said the company is gradually recovering from the unfavourable offshore support vessel market due to the lack of new vessel contracts. The research house is maintaining its "buy" call, with an unchanged target price based on the existing price earnings ratio of 15 times financial year 2011 earnings per share. Despite these positive news, OSK is maintaining its financial year 2011 forecast as it has earlier assumed Alam Maritim's vessels would have contracts based on management's guided utilisation rate of about 70 per cent. The research house said what is more important for the vessel operators based on the current operating environment is to boost their utilisation rates, rather than getting high charter rates. This is because any incremental gain in the charter rate of about 10 to 20 per cent would still be insignificant compared to bearing the cost of an unutilised vessel, which OSK estimates would make up about 50 per cent of the charter rate. Hence, due to the scarcity of new vessel contracts, it is important that vessel operators get their vessels sailing and out of the dock. |
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