ARMADA (5210) : CIMB Research advises investors to accumulate Bumi Armada, target price RM2.56
KUALA LUMPUR: CIMB Equities Research has advised investors to take advantage of the share price correction in Bumi Armada and accumulate the shares.
It said on Monday that despite the leadership change with Hassan Basma is stepping down as CEO due to “family reasons” and current oil price weakness, it continues to like Bumi Armada’s long-term fundamentals.
CIMB Research said the company’s fundamentals are anchored by its firm order book of RM21.8bil, excluding the 10-year US$1.18bil Madura contract and extension options worth RM11.8bil.
“The company is currently bidding for four FPSO projects - one each in Ghana, Nigeria, Namibia and Angola,” it said. Its target price for Bumi Armada is RM2.56, which is a massive 146% above its last traded market price of RM1.04.
CIMB Research said Basma told them that while he was stepping down as CEO due to “family reasons”, he would stay on as a consultant until mid-2016.
Under his leadership, Bumi Armada has climbed a notch to No. 5 in the world’s FPSO league table over the past three years.
“While his resignation as CEO is a negative development, we take comfort in the company’s long-term fundamentals, supported by a firm order backlog of RM21.8bil.
“We continue to value the stock at 21.2 times CY16 price-to-earnings (P/E), still at a 30% premium over our target market P/E of 16.3 times pending a review of our premium valuations.
“Maintain Add with a strong FPSO contract pipeline as potential re-rating catalyst,” it said.
http://www.theedgemarkets.com
KUALA LUMPUR: CIMB Equities Research has advised investors to take advantage of the share price correction in Bumi Armada and accumulate the shares.
It said on Monday that despite the leadership change with Hassan Basma is stepping down as CEO due to “family reasons” and current oil price weakness, it continues to like Bumi Armada’s long-term fundamentals.
CIMB Research said the company’s fundamentals are anchored by its firm order book of RM21.8bil, excluding the 10-year US$1.18bil Madura contract and extension options worth RM11.8bil.
“The company is currently bidding for four FPSO projects - one each in Ghana, Nigeria, Namibia and Angola,” it said. Its target price for Bumi Armada is RM2.56, which is a massive 146% above its last traded market price of RM1.04.
CIMB Research said Basma told them that while he was stepping down as CEO due to “family reasons”, he would stay on as a consultant until mid-2016.
Under his leadership, Bumi Armada has climbed a notch to No. 5 in the world’s FPSO league table over the past three years.
“While his resignation as CEO is a negative development, we take comfort in the company’s long-term fundamentals, supported by a firm order backlog of RM21.8bil.
“We continue to value the stock at 21.2 times CY16 price-to-earnings (P/E), still at a 30% premium over our target market P/E of 16.3 times pending a review of our premium valuations.
“Maintain Add with a strong FPSO contract pipeline as potential re-rating catalyst,” it said.
http://www.theedgemarkets.com
