KUALA LUMPUR (Oct 23): Alam Maritim Resources Bhd (KL:ALAM) expects its planned purchase of an offshore support vessel will allow it to be more competitive in bidding for oil and gas subsea services jobs while cutting charter costs.
The offshore service provider’s estimates that owning the vessel instead of chartering it would save the company about RM9.4 million a year. This is an attractive prospect considering that for the financial year ended June 30, 2026 (FY2026), Alam Maritim's cost of sales consumed about RM254.37 million (68.1%) of its RM373.31 million revenue.
Subsea services include specialised engineering, maintenance, construction and oil and gas pipelines inspection activities performed underwater, primarily for the offshore energy industry.
"Chartering a vessel involves paying for the third-party owner's built-in profit margin. By acquiring our own vessel, we can manage that cost layer internally and retain that profit within the company,” chief financial officer Eric Yap Yuen Yee told The Edge on the sidelines of the company’s extraordinary general meeting (EGM) on Friday.
“If we own the asset, we gain the pricing flexibility to bid lower to our clients while securing a long term relationship,” Yap added.
The group's shareholders had voted in favour of buying the 65-metre vessel from Singapore-based shipbuilder POET Shipbuilding & Engineering Pte Ltd for US$19.8 million (RM80.8 million) cash.
The acquisition would be the company first subsea vessel, marking a shift from third-party chartering and would afford Alam Maritim additional capacity to support project delivery and future tenders participation.
This comes as the group rebuilds its business pipeline following its exit from Practice Note 17 (PN17) status on June 8.
Currently, the offshore services provider operates a fleet of four chartered vessels.
Alam Maritim would fund the acquisition via bank borrowings of RM44.66 million and internally generated funds of RM44.66 million. The vessel is expected to be completed by October 2028.
Yap noted that Alam Maritim has initiated talks with several local banks and received engagements from few foreign banks.
As at end-June, the company has RM99.16 million cash and short term deposits versus RM3.31 million in borrowings.
Meanwhile, the group's subsea contract order book stood at RM1.44 billion as of Aug 31.
At Friday's close, Alam Maritim shares were flat at 21.5 sen, valuing the group at RM95.8 million. The counter has fallen about 40% from its yearly peak of 34 sen.