I have bought in some ARMADA at 3.96 to follow the BOOMING industry of OIL and GAS.

Bumi Armada FY13 misses expectations despite record year

KUALA LUMPUR:  CIMB Equities Research said Bumi Armada had a choppy 4Q FY13 due to lower vessel utilisation.

“Consequently, FY13 net profit missed expectations, coming in at 91% of our forecast and 87% of consensus. Nonetheless, FY13 was a record year for Bumi Armada,” it said on Thursday.

The research house lowered its FY14-15 EPS to account for a lower vessel utilisation, but despite the EPS cuts, the company is on course to reach new net profit highs as more contributions from the C7 and Kraken FPSO contracts kick in.

“Our slightly lower target price (of RM 5.17 versus earlier RM5.23) is still based on 22.5 times CY15 P/E, a 40% premium over our implied target market P/E of 16.1 times, which is still within the historical P/E range of the oil & gas big caps. A strong FPSO contract pipeline is a potential re-rating catalyst for our Add recommendation,” it said.

CIMB Research pointed out Bumi Armada's 4Q13 net profit dropped 19% on-year due to a lower utilisation of its offshore support vessels (OSV) in Malaysia.

The average utilisation rate fell to 81% in 4Q13 from 87% in 4Q12 as older vessels aged 12 years or more received less demand due to a new requirement by a key client. However, the weakness in 4Q13 did not stop the company from delivering a new record year, thanks to a 12% increase in the full-year net profit.

This came mostly from the two new floating, production, storage and offloading (FPSO) contracts secured in FY13: the US$740mil C7 contract awarded in Feb and the US$1.4bil Kraken contract dished out in December.

CIMB Research also said on Jan 15, 2014, it wrote that Bumi Armada is in a two-way race with Saipem for a contract to supply Eni with an FPSO vessel in Angola. The bid’s outcome is expected by end-1Q14, at the earliest.

“A winning bid would mark Bumi Armada's debut in Angola as well as its eighth and biggest FPSO contract. The contract is valued at around US$1.5bil. Management is optimistic about its chances in securing the contract.

“Bumi Armada’s order book is now at RM13.2bil, driven by the FPSO segment (77%), followed by transport & installation (12%) and OSV (11%). Its extension options, which could go up until 2038, are worth RM8.9bil, 79% of which are from FPSO and 21% from OSV,” it added.