ARMADA (5210) : CIMB Research maintains Add on Bumi Armada, lowers target price to RM2.35
KUALA LUMPUR: CIMB Equities Research is retaining its Buy call on Bumi Armada but with a lower target price of RM2.35 from the previous RM2.56 .
It said on Friday Bumi Armada has closed FY14 with the finalisation of the Madura floating production, storage and offloading (FPSO) contract with Husky-CNOOC Madura FPSO, which takes the company’s order book to a new high of an estimated RM23.4bil.
The research house said Madura also marks Bumi Armada’s second FPSO contract this year and expands the company’s FPSO fleet to nine vessels, its biggest ever.
“Management has now set its sights on four additional FPSO contracts. Our target price drops as we now value the stock at 19.5 times CY16 P/E, still at a 30% premium over our revised target market P/E of 15x, from 16.3x previously. We maintain our Add call with a strong FPSO contract pipeline as potential re-rating catalyst,” it said.
On Thursday, Bumi Armada announced that it had signed the Madura floating production, storage and offloading (FPSO) contract with Husky-CNOOC.
The contract is for a firm 10-year, US$1.18bil charter, with five annual extension options worth US$147mil.
CIMB Research said the FPSO vessel is expected to start operations at the Madura BD field in Indonesia in 4Q16. The contract was secured by 50%-owned PT Armada Gema Nusantara, on Aug 19, 2014.
“We are pleased that Bumi Armada has finalised the Madura contract after three extensions. Madura is Bumi Armada’s ninth FPSO contract and the second secured this year after the US$2.9bil 1506 contract awarded in Mar. The 1506 contract is the company’s biggest ever.
Armed with nine FPSO vessels, the company remains the world’s fifth largest FPSO operator by fleet size. Based on Bumi Armada’s 50% stake, Madura gives the company’s order book a
9% boost to hit a new record of an estimated RM23.4bil, second only to
SapuraKencana’s RM26.2bil order book. Bumi Armada also has extension options worth RM11.8bil.
“The company is currently bidding for four FPSO contracts - one each in Ghana, Nigeria, Namibia and Angola.
“Madura appears to be outgoing CEO Hassan Basma’s last contract before his resignation takes effect on Jan 1, 2015. He will stay on as a consultant, working alongside acting CEO Chan Chee Beng.
CIMB Research advised investors to take advantage of the share price correction and accumulate the shares.
Despite the current oil price weakness, the research house continues 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. All nine FPSO contracts are outside Malaysia and have no oil price connections.
http://www.thestar.com.my
KUALA LUMPUR: CIMB Equities Research is retaining its Buy call on Bumi Armada but with a lower target price of RM2.35 from the previous RM2.56 .
It said on Friday Bumi Armada has closed FY14 with the finalisation of the Madura floating production, storage and offloading (FPSO) contract with Husky-CNOOC Madura FPSO, which takes the company’s order book to a new high of an estimated RM23.4bil.
The research house said Madura also marks Bumi Armada’s second FPSO contract this year and expands the company’s FPSO fleet to nine vessels, its biggest ever.
“Management has now set its sights on four additional FPSO contracts. Our target price drops as we now value the stock at 19.5 times CY16 P/E, still at a 30% premium over our revised target market P/E of 15x, from 16.3x previously. We maintain our Add call with a strong FPSO contract pipeline as potential re-rating catalyst,” it said.
On Thursday, Bumi Armada announced that it had signed the Madura floating production, storage and offloading (FPSO) contract with Husky-CNOOC.
The contract is for a firm 10-year, US$1.18bil charter, with five annual extension options worth US$147mil.
CIMB Research said the FPSO vessel is expected to start operations at the Madura BD field in Indonesia in 4Q16. The contract was secured by 50%-owned PT Armada Gema Nusantara, on Aug 19, 2014.
“We are pleased that Bumi Armada has finalised the Madura contract after three extensions. Madura is Bumi Armada’s ninth FPSO contract and the second secured this year after the US$2.9bil 1506 contract awarded in Mar. The 1506 contract is the company’s biggest ever.
Armed with nine FPSO vessels, the company remains the world’s fifth largest FPSO operator by fleet size. Based on Bumi Armada’s 50% stake, Madura gives the company’s order book a
9% boost to hit a new record of an estimated RM23.4bil, second only to
SapuraKencana’s RM26.2bil order book. Bumi Armada also has extension options worth RM11.8bil.
“The company is currently bidding for four FPSO contracts - one each in Ghana, Nigeria, Namibia and Angola.
“Madura appears to be outgoing CEO Hassan Basma’s last contract before his resignation takes effect on Jan 1, 2015. He will stay on as a consultant, working alongside acting CEO Chan Chee Beng.
CIMB Research advised investors to take advantage of the share price correction and accumulate the shares.
Despite the current oil price weakness, the research house continues 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. All nine FPSO contracts are outside Malaysia and have no oil price connections.
http://www.thestar.com.my
