KUCHING: Alam Maritim Resources Bhd (Alam Maritim) is expected to deliver strong performances in the near future after clinching three lucrative charter contracts worth RM32 million with more expected in the pipeline.

This was riding on the back of strong capital expenditure pattern currently seen in the oil and gas industry in Malaysia.

According to a research report by Kenanga Investment Bank Bhd (Kenanga Research), “Yesterday, Alam Maritim’s wholly-owned subsidiary announced the contracts won, which includes one from Dayang Enterprise Sdn Bhd for RM8.68 million and another from Petronas Carigali Sdn Bhd (Petronas Carigali) for the extension contracts of chartering out two anchor handling tug supply (AHTS) boats for 23.32 million.”

While the AHTS charter rates saw no change, at a fair US$1.77 per boiler horse power due to it being an extension from the previous three-year contract, Alam Maritim was expected to earn less in ringgit terms for its one-year extension contracts.

“The Malaysian ringgit appreciated against the US dollar since the commencement of the initial contract, from US$1 being equivalent to RM3.50 three years ago, to the current RM3.10 currently,” the research house explained.

“We understand that Alam Maritim is expected to secure few more contracts in the near term,” commented the research house, adding that “this should help to improve the company’s utilisation rate, hence profit margins.”

Kenanga Research thus pegged a target price of RM1.15 per share, based on 15 times financial year 2012 earnings multiplier.

Its expected financial year 2011 to 2012 net profit of RM30.8 million to RM60.5 million remained unchanged, foreseeing a better second half of 2011 for Alam Maritim as charger rates improved along with higher utilisation.

ECM Libra Capital Sdn Bhd (ECM Libra Research) assumed an equally optimistic stance on Alam Maritim, pegging a target price of RM1.11 per share, backed by its observation that a significant pickup in demand was occurring for offshore support vessels in Malaysia.

The pickup was expected to cause a similar positive ripple effect for the Alam Maritim. More light was shed on the Alam Maritim’s orderbook which ECM Libra Research estimated to have grown to roughly RM732 million, the bulk (RM486 million) of which were awarded this year.

Similarly, the research house “believed that there will be more long term charters to be announced going into 2012,” as offshore oil and gas capital expenditure in Malaysia was “not likely to wane in the coming year”.