BUMI ARMADA BHD

Target price: RM0.90

BUMI Armada Bhd’s revenue for the first quarter of FY2017 (1QFY17) slipped marginally to RM404.2mil with its profit after tax and minority interest back in the black free from impairments to RM48.1mil.

Stripping off the net forex loss of RM27.5mil, core profit would be RM84mil.

Lower offshore support vessel (OSV) utilisation average of 42% and lower contribution from the Luk Oil project in the Caspian Sea from winter season translated to a slightly lower earnings before interest, taxes, depreciation and amortisation.

Albeit this, the improvement of earnings reflects the fundamentals of the oncoming operations recorded this quarter, mainly from Armada LNG Mediterrana (Malta) and

Armada Olombendo (Angola). Public Invest Research expects Bumi Armada’s performance to be boosted further when Karapan Armada Sterling III (Madura) and Armada Kraken both come online by the second half of FY17.

The group’s order book stands at a firm RM23.9bil with RM13.7bil optional extensions, predominantly in the floating production and operation segment as at March 31, 2017.

Higher segmental contributions came from Armada Olombendo Floating Production Storage and Offloading (FPSO) and Armada LNG Mediterrana Floating Storage Unit, but partly offset by additional supplementary payments for the Kraken FPSO in 1QFY17. All FPSOs are operating at 99% uptime. “The group has also completed the documentation sale of Armada Perkasa FPSO, and with the handover of operations deemed completed which we view positively, would relieve Bumi Armada of the potential continued non-collectible receivables.