Alam Maritim to see weaker half ahead

KUCHING: Alam Maritim Resources Bhd (Alam Maritim) is expected to see a weaker second half of 2017 (2H17) despite turning profitable with a profit of RM1.7 million in the second quarter of 2017 (2Q17).

The research team at Kenanga Investment Bank Bhd ( Kenanga Research) highlighted this in a recent report, and opined, “The current challenging offshore support vessel ( OSV) segment is expected to be extended this year given slower contract awarding in the OSV space.

“Therefore, we maintain our financial year 2017 (FY17) and FY18 estimtaed losses at RM31.3 million and RM19.3 million, respectively, assuming FY17 and FY18 vessel utilisation of 50 and 55 per cent.”

Meanwhile, on Alam Maritim’s 1H17 results, the research team noted that it recorded a net loss of RM8.5 million which came within expectations.

Nevertheless, it pointed out that despite the losses, Alam Maritim has climbed back to the black with a core net profit of RM1.7 million in 2Q17 from RM10.1 million losses in 1Q17 due to 1.7-folds jump in revenue as a result of better vessel utilisation and higher OIC revenue leading to higher operating margins and improvement in joint venture and associates earnings.

It noted that on a year-on-year (yo-y) basis, Alam Maritim’s earnings slipped by 14 per cent or RM0.3 million from RM2 million earnings in 2Q16 dragged by 35 per cent decline in revenue but offset by lower interest expense and stronger JV and associate earnings.

“Cumulatively, 1H17 core loss widened by seven per cent to RM8.5 million from RM7.9 million losses in 1H16 as a result of poorer performance from both OSV and OIC segments,” the research team added.

All in, Kenanga Research said, pending a clearer restructuring plan and coupled with no reprieve in the near-term outlook, in maintained its ‘underperform’ call on the stock.