Bumi Armada

Bumi Armada

Postby winston » Thu Nov 20, 2014 9:57 am

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Bumi Armada, a growing FPSO giant


Bumi Armada Bhd
(Nov 19, RM1.40)

Initiate coverage with “outperform” with a target price (TP) of RM1.77: A growing global oil and gas (O&G) competitor, Bumi Armada is currently the world’s fifth-largest floating production storage and offloading (FPSO) player, also an established offshore support vessel (OSV), transport and installation (T&I) and oilfield services provider.

We are initiating coverage on Bumi Armada with an “outperform” recommendation, as we believe the group is on track to achieve its growth strategies with its RM21.7 billion firm contract order book which sees earnings visibility up to 2023. Amid the oil price uncertainty, we are reassured by the group’s ongoing sustainability as any termination in contracts would be subject to a substantial penalty.

Our TP of RM1.77 is is based on a discounted cash flow approach with a weighted average cost of capital of 10%, implying a forecast financial year 2015 forward price-earnings ratio of 15.5 times. Considering Bumi Armada’s earnings visibility from long-term contracts secured and plans to annually add on new vessels with secured contracts to provide continuous replenishment of its order book, we deem our valuation reasonable.

Operating on eight FPSO contracts concurrently, coupled with new contracts to be expected annually, Bumi Armada targets to be the fourth-largest FPSO player in the world. The group has moved from small FPSOs (less than US$500 million [RM1.68 billion] capital expenditure [capex]) to large FPSOs (more than US$1 billion capex) reaffirming its growth momentum going forward.

Bumi Armada’s operating FPSOs have met their contractual uptime and are actually performing at 99% uptime (contractual is usually 95%). We understand that some contracts will reward the group with a bonus if more than 95% uptime is maintained. The group’s focus on securing LT FPSO contracts will thus provide stable and recurring cash flows for its offshore business.

As any termination in contracts would be subject to a penalty which could be up to the full value of the contract value at that point. This is furthermore supported by a bank guarantee or a parent guarantee for the total assets. We thus concede Bumi Armada’s business model would continue to be sustainable amid any oil price fluctuations or uncertainties. Even at current oil prices, it is important to identify the differing drilling costs for different location conditions.

The group’s portfolio comprises 56 vessels, of which seven have been earmarked for disposal. Having identified the valuable proposition of the OSV industry, the group has begun to restructure its operations, fleet renewal, towards a higher specification fleet. Currently operating less than 80% of class A of utilisation rate, we are positive the group is taking necessary measures to revive this segment.

Source: PublicInvest Research

http://www.theedgemarkets.com/my/articl ... fpso-giant
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Re: Bumi Armada

Postby winston » Sat Dec 06, 2014 7:30 am

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Bumi Armada Bhd chief executive officer (CEO) and executive director Hassan Assad Basma, who sold the remainder of his equity stake in the company due to margin calls, has today tendered his resignation, with effect from Jan 1, 2015.

In a filing with Bursa Malaysia today, Bumi Armada said due to family reasons, Hassan has requested for an early release of his contract of employment, which the board of directors has then agreed to.

Hassan will also relinquish his directorships in other companies within Bumi Armada Group with effect from next year.

In a press statement today, Bumi Armada said the board has initiated steps to search for a new CEO, with in-depth relevant experience in the offshore and marine services industry.

Pending the appointment of a new CEO, Chan Chee Beng, a member of the board since 2003, has been re-designated as executive director and acting CEO, also with effect from Jan 1 next year.

Bum Armada share price closed unchanged today at RM1.04, with 20.15 million shares traded, giving it a market capitalisation of RM6.1 billion.

Source: The Star
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Re: Bumi Armada

Postby winston » Sun Dec 14, 2014 5:52 am

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Eye on Stock

Sentiment towards oil and gas related counters may have been dented due to the falling crude oil prices. But Bumi Armada Bhd has found itself in a sweet spot after securing the US$1.18bil (RM3.98bil) contract to supply one floating, production, storage and offloading vessel (FPSO) with Husky-CNOOC Madura Ltd in Indonesia over the week.

Having suffered significant selldown in recent months, the current weakness of Bumi Armada’s share price provides an opportunity for investors to accumulate the company that boasts a strong orderbook.

“Despite the current oil price weakness, we continue to like Bumi Armada for its solid earnings visibility given the long-term nature of FPSO contracts, and its good leverage in the international market,” CIMB Research says.

“All nine FPSO contracts are outside Malaysia and have no oil price connections,” it adds.

According to CIMB Research, based on Bumi Armada’s 50% stake, the Madura contract would give the company’s orderbook a 9% boost to hit a new record of an estimated RM23.4bil – second only to SapuraKencana Petroleum Bhd’s RM26.2bil orderbook. In addition, Bumi Armada has extension options worth RM11.8bil.

According to Public Investment Bank Research (PIB), FPSOs are a safe haven as oil producers look more closely at economic viability of oil production.

PIB says Bumi Armada’s performance will be buoyed by strong orderbook; firm earnings and cashflow visibility up to 2024; higher activities from its transport and installation, offshore support vessels and oilfield services divisions; execution abilities and reputation which has led to contract wins; and a strong balance sheet.

Bumi Armada closed one sen lower yesterday at RM1.02.

Source: The Star
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Re: Bumi Armada

Postby winston » Fri Dec 19, 2014 12:58 pm

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Ananda Krishnan looking to exit Bumi Armada

Malaysian tycoon Ananda Krishnan is looking to sell his entire 34.9 percent stake in Bumi Armada Bhd, Asia's largest floating, production, storage and offloading (FPSO) company, The Edge Financial Daily reported, citing sources.

"Some oil and gas (O&G) service companies have been approached to take up AK's stake in Bumi Armada," the source told the paper, adding that the deal could be settled by cash or a share swap in the purchaser's company.


Source: Reuters
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Re: Bumi Armada

Postby winston » Tue Dec 23, 2014 1:41 pm

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Alliance Research maintains Buy on Bumi Armada

KUALA LUMPUR: Alliance Research has maintained its Buy call on Bumi Armada with a target price of RM1.70 as the stock is oversold, it said.

In a note on Friday, the research house said earnings outlook is underpinned by the RM35bil outstanding orderbook with nine firm FPSO contracts.

"We trimmed earnings due to the bearish outlook for crude oil price and mounting concerns over declining offshore capital expenditure. Even after including RM15mil p.a. JV contribution from the Madura project starting FY15, earnings were still reduced by 12% for FY15F and 8% for FY16F," it noted.

It added that Bumi Armada will replace seven vessels with four new multi-purpose vessels (MPSV) and three ice class vessels.

The latter have secured long term charters, but the MPSV may see slow demand.

"In the T&I division, we see further risks for Armada Hawk, Condor and KP1 vessels and now assume 50% utilisation instead of 70%. We also reflected higher interest costs arising from additional borrowings for the Madura conversion," it said.

Alliance said that it expects new FPSO tendering activity to be unexciting as long as crude oil price remains suppressed.

"Pemex has pushed back two projects, and possibly more. Bumi Armada still has three firm bids in Africa but that could drag on into FY16. That said, the group has three major conversions on their plate to keep them busy in the interim.

"FY15-16 earnings growth will be driven by conversion progress for the Kraken, Angola 15/06, and to a smaller extent, Madura FPSO," it noted.

Source: The Star
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Re: Bumi Armada

Postby winston » Fri Oct 06, 2017 10:26 am

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2017 is set to be a turnaround year for the group. 1H17 profit showed growth due to maiden earnings from Olombendo and Malta.

New earnings contribution from the remaining two floating projects (Kraken and Madura) will support a stronger 2H17 performance.

We also see the possibility of a TGT1 extension.

Share Price Catalyst
1. Full acceptance of FPSOs Olombendo and Kraken by end-17.
2. Recovery of OMS utilisation and rates.

Source: UOBKH
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Re: Bumi Armada

Postby winston » Thu Mar 22, 2018 9:11 am

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Trading Buy: ARMADA - 5210
(Last price: RM0.850, Potential upside +35.3%)


Company Profile

• Bumi Armada Berhad is a Malaysia-based, which provides offshore services via two business units – Floating Production and Operation (“FPO”) of oil and gas solutions and Offshore Marine Services (“OMS”) which comprises of Offshore Support Vessel (“OSV”) and Subsea Construction (“SC”) services with a presence in over 17 countries spread across five continents, supported by over 2,000 people from over 35 nationalities.


Trading Catalyst

• FY17 core net profit stood at RM282.0m against a loss of RM151.8m in FY16 on the back of the turnaround in FSPO division and stronger OMS contribution.

• As Brent oil has surged above US$66 and could be heading towards the resistance of US$69.8-70.0, we think this will generate trading interest amongst the O&G stocks. Brent oil’s LT target will be located around US$88 (extrapolated using the inverted Head and Shoulders formation).

• With the recent retest of the support near RM0.80, coupled with a short term breakout above RM0.845 level yesterday, we think Bumi Armada could be forming an inverted Head and Shoulders pattern to revisit the LT target of RM1.15 over the long run.

Technical View
• Resistance: RM0.900 / RM0.975 / RM1.15
• Support: RM0.800 / RM0.790
• Cut loss: RM0.785

Key Financial Stats
• FY17 core net profit: RM282.0m (FY16: -RM151.8m)

Source: Bloomberg, HLIB
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Re: Bumi Armada

Postby winston » Wed Oct 23, 2019 8:18 am

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Sep 10. 2019

The first and largest FPSO in Malaysia and 5th in the world.

Steady orderbook – Orderbook remains steady at RM18.9b (FPO: RM17.9bn, OMS: RM1bn) another RM9.9bn worth of potential extension. This will sustain the group’s revenue for the next few years.

Valuation & Recommendation
Maintain BUY call with an unchanged target price of RM0.47 based on +1 SD to its 3-year average P/B.

Risks remain its high debt and gearing level despite the recent refinancing.

Potential upside is the possible compensation of US$280m (>RM1b) from the Armada Claire court case and judgement is expected in 4Q19.

Source: JF Apex
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Re: Bumi Armada

Postby winston » Mon Jan 04, 2021 8:25 pm

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Bumi Armada, which is an international offshore oilfield service provider, also had its "buy" call maintained with a new TP of 43 sen from 38 sen earlier.

"We continue to like Bumi Armada for its improved earnings and cash flow visibility, underpinned by stable FPSO (floating production storage and offloading) contributions masking weaker offshore marine services (OMS) weakness.

Its risk-reward profile looks attractive as the current 5.2 times FY21 (the financial year ending Dec 31, 2021) price-to-earnings and 0.5 times FY20 price-to-book value (-1.5 standard deviations to its three-year mean) reflect an elevated 2.6 times net gearing as at 3Q20," said Lim in another statement.

Its TP, meanwhile, was raised after narrowing the discounted cash flow of the Armada Kraken FPSO to 10%, from 20% earlier, due to better vessel stability.

The analyst noted that its FPSO earnings could have risen on a quarterly basis in 4QFY20 on higher contributions from Armada Kraken after its scheduled maintenance was completed in September.

"Our new TP implies 6.4 times FY21F (forecasted) price-earnings ratio and 0.6 times FY21 forward price-to-book value.

Our base-case assumption is that Bumi Armada will refinance the borrowings due in May, so no equity fundraising would be required," he said, referring to RM656 million in short-term debt due that month.

Lim said while the OMS segment is expected to still face headwinds in 4Q20 — in the absence of subsea work orders and potentially lower offshore service vessel (OSV) utilisation rates due to the monsoon season — he believes that OSV contributions could improve in 2021.

"This may stem from higher vessel demand on drilling and related projects, while Bumi Armada pushes for better spot charter rates."

Source: The Edge
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Re: Bumi Armada

Postby winston » Thu Apr 15, 2021 9:13 am

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On stock selection, the overnight surge in oil prices to USD66/barrel may provide some trading interests among the O&G stocks.

Our top pick for the sector is Armada (RM0.43-HLIB Research BUY-TP: RM0.75) for its strong FPSO business and fast improving balance sheet.

Yesterday, the positive downtrend line breakout and bottoming up technical oscillators may spur prices higher to RM0.46-0.48-0.53 zones whilst supports are situated at RM0.415-0.40-0.385 levels.

Source: HLIB
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