JoshuaMS7oil price up for 2 days about 4% to 43 usd due to US inventory dropping fast!! Today might got show!!
15/10/2020 8:41 AM
AnaiAnaiuhuk uhuk. today can green? Brent price above 43 again. Can break out or not? 3rd attempt to break 44.
15/10/2020 8:42 AM
JoshuaMS7yaya let see tonight EIA inventory report again!! Fundamentally must drop continue only can bring oil price breakeven!!
15/10/2020 9:02 AM
JojobaaArmada's days of impairments are over, the 300 mil on the OMS is the last one.
With Armada D1 being extended, the next expiry of charter from firmed period is only coming in 2024. Debts are being paid down from its EBITDA of RM1 billion. Debts only increased because USD had appreciated to USD4.40 as at 1st quarter and USD4.28 as at 2nd quarter. RM1.5 billion has been paid, translating to debt paring down of RM250 million a quarter. Enquest, its customer for Kraken has breakeven field of USD10-15 bucks, so they are still above water, and unless oil price plunge below USD10 for prolonged period of time, chances of them terminating is close to zero.
OMS is loss making, but still EBITDA positive. I read somewhere that Armada Constructor and Installer has assumed no jobs till 2022, so any further impairments before then is slim.
Armada will probably make around RM300-400 million a year here onwards. Management is doing the right thing, paring down debt aggressively and maintaining operational consistency.
I am leaning towards AmInvestment and Hong Leong's target price of RM0.50-RM0.60. Over next few quarters, once it makes 2 consecutive quarters of RM80-100 million profit, Koon Yew Yin's followers will buy as it is trading at 5x and meets his golden rule. Debt is not a problem as they are generating substantial EBITDA. Interest rate reduction of 2% also saves Armada RM50 million in interest cost a year.
15/10/2020 2:14 PM
JojobaaCEO said FPSO is immune to oil price. Why? Because before they commit to a project they screen through the profile of clients and primarily the breakeven cost of oil prices. At USD40, most of its clients are still generating positive EBITDA and profit, with breakeven at USD15 and 27 respectively for Enquest, so no oil price will not pose a serious risk to its FPSO business under current conditions. An oil field is drilled after forecasting for 10 or more years and therefore its clients will continue to drill as long as it is generating positive cash flow. Termination of oil field will leave operators cripple as they cannot produce oil clients has to be severely financially distressed to take this step.
15/10/2020 2:23 PM
JojobaaSome people are spooked with Maybank's valuation. First we have to understand that Maybank has written off approximately RM10 billion of its extension orderbook. This is a very drastic assumption. The recent extension of Armada TGT1 and Armada D1 has shown that not only will clients extend, they are even extending for longer durations (in the case of Armada D1) as oil field may still be producing robustly. Imagine if you just write off RM10 billion off a company's books. I don't see him doing the same on Yinson's orderbook.
Furthermore, Maybank has put a value of zero on the values of its OMS division. This is also not a fair assumption as its OMS division is still EBITDA positive. If an asset is EBITDA positive, it is still generating cash for its owner. The losses relates to the losses relative to the investment made on the assets but Armada has also been selling its OMS assets at gains (meaning sales price exceed book value).
Maybank has essentially valued Armada as if it is not cash flow positive, in financial distress and is at risk to declare bankrupty. I can assure you if you look at the cash flow statement, Armada has kitchen sunk most if not all its legacy investments and is a healthy company generating enough cash flow to pay off its debts and generate earnings for its shareholders.
15/10/2020 2:29 PM
JojobaaLast but not least, there is also skepticism with regards for Armada to repay in excess of RM600 million over next 12 months (under current liabilities). Some analysts have reiterated that Armada needs to sell its OMS assets to pay this sum. In my view, selling the OMS assets is only a supplementary action to pay off its debts. Armada is generating RM1 billion per year after interest costs and that will be more than enough to pay RM600 million over the next 12 months.
15/10/2020 2:34 PM
zonefinderAm expecting this mother to jump to 50cts with 2 consecutive +ve qtrs.
TAK1They have been trying to sell oms for the past 2 years without success with annual maintanance cost scrapyard waiting
16/10/2020 4:11 AM
JojobaaDear Mr TAK1, for the past 2 years, if you read the annual report, they have disposed off close to 20 OMS vessels, and now they have only circa 35 vessels remaining.
Again, if you read the financial statements, you would have also seen that the OMS division is EBITDA positive, meaning segment results still exceed depreciation charges, so I guess if you look at it objectively, you can bash the OMS for its poor performance. From my point of view, Armada is progressing well IN SPITE OF the annual maintenance cost scrapyard waiting whatever that you just said.
16/10/2020 9:15 AM
UpupshareJojobaa, the story is different now for 2020 2nd half til 2021. Since MCO there were zero new contract from Petronas and oil majors in Malaysia...lets see how bad the result...
16/10/2020 10:11 AM
JojobaaUpupshare, Armada's FPSO clients are Eni, Husky, Oil and Gas National Oil Company, Enquest, and Hong Loang Joint Operating Co. They have 0 FPSOs with Petronas, sir.
16/10/2020 10:19 AM
JojobaaBy the way Armada C7 got extended, for another 8 years firm period, so don't quite understand what you mean there were zero new contracts from Petronas and oil majors in Malaysia. None of Armada's FPSO operates in Malaysia.
AnaiAnaiuhuk uhuk. cerita so much also tak jalan. Only QR with another 100mil profit then it will be different story. Stay tune. wait for the outcome in nov.
RJ87this is a zero sum game...Maybank IB buys heavy on Yinson. If FM comes looking for counters to buy from this sector; ofcos he is gonna say Yinson awesome and Armada lousy.
No need read what IB analyst say la...u take in the facts, we find out what they trying to hide. Given risk and reward; I personally find armada offer better risk reward than yinson.
Yinson wanna give 300% return. Impossible. Aramda wanna give 300% return. Sap sap sui. PE 10 on, EPS8 per annum (maintain EPS 2sen per quarter for the rest of 2021. Don't screw up for 1 year. DONE.
Go ask Maybank analyst what does it cost for Yinson to give 300% return? Maybank analyst will say Armada earnings enough to cover finance cost or not? I can also throwback Yinson's debt isn't low. Maybank will say Yinson's collateralized assets are paying itself. I will say Armada's current high idling assets can also maintain 2sen eps. If can increase idle asset utilization, eps go up to 3-4sen?
MabelMaintain NEUTRAL. Based on the aforementioned points raised, we do not foresee Petronas elevating its upstream capex in the next 6-months. The prospects for upstream services players are still negative. However, most upstream services names have already went through a sizable decline in its share price. The share price of upstream services players like Dayang, Velesto, MMHE are expected to stay muted in the near-term and have fallen within our hold call thresholds.
Our top picks are Bumi Armada (TP: RM0.60, BUY) for its strong FPSO earnings and relative insulation from the volatility in oil prices and Serba (TP: RM2.50; BUY) for its strong recurring income from its O&M segment and large current orderbook backlog of RM18.5bn. We also like PCHEM (TP:RM6.50; BUY) as Petrochemical ASPs have increased due to delays and deferrals of impending petrochemical plant additions and improved demand of plas tics from the healthcare sector.
Source: Hong Leong Investment Bank Research - 14 Oct 2020
AnaiAnaiuhuk uhuk. bursa red. supertanker sinking.
21/10/2020 5:14 PM
strattegistaiyoooo... now 3 metres under water... gulp gulp
21/10/2020 5:17 PM
MabelOil & Gas - Biden Win May be Negative for Oil Author: HLInvest | Publish date: Wed, 14 Oct 2020, 9:57 AM
We foresee crude oil prices trading sideways with downside bias towards the end of CY20 due to (i) higher crude oil production from Libya, (ii) reduced China demand, (iii) resurgence of Covid-19 cases globally and (iv) resolution of Norway’s labour union strike. This will be partially mitigated by OPEC’s commitment to support oil prices in the event of further price weaknesses. We also opine that a Biden victory would be negative for oil prices due to his commitment to reduce carbon emissions. We revise our 4Q20 Brent oil price forecast from USD50/bbl to USD42/bbl while cutting our CY21 Brent oil forecast from USD55/bbl to USD50/bbl. Maintain NEUTRAL on the sector as we believe that the prospects for the O&G sector is not bright yet at this juncture despite the recent price weaknesses. Our top picks for the sector are Bumi Armada (TP: RM0.60; BUY) for upstream and PCHEM (TP: RM6.50; BUY) for downstream.
Source: Hong Leong Investment Bank Research - 14 Oct 2020
22/10/2020 9:46 AM
MabelLove him or hate him, I really doubt that Trump will lose. A couple of months ago, I was sceptical of his chances, but I think his chances of being re-elected have gone up considerably with the COVID-19 pandemic. This may sound counterintuitive since the US economy was doing much better before the pandemic.
Clinton won in 1992 by promising to fix the broken economy after a recession. Bush won in 2000 by saying he would bring family values back to the white house. Obama won by promising to fix the economy and end the wars in the middle east, and by offering hope to a nation that was beginning to lose it. Whether or not you like these presidents and their platforms, you have to admit that they worked.
Fast forward to 2016. Trump won by promising to kick immigrants out of the country and to expand the manufacturing sector. Trump won by making people angry, by rousing the kind of nationalistic fervour that has not been seen in America in decades.
His platform worked even when the overall economy was doing well and unemployment rate was under 5% because many people (especially, in the mid-west), felt that they were being left behind.
Now, if the economy was doing very well, Trump would have a harder time convincing his base to be angry. Yes, he would have gained some support among moderates but that would be a small number. Most people who don’t support Trump, would not vote for him even anyway. Moreover, Trump’s base is actually very small, much smaller than other recent presidents, and he needs every one of them to be angry to win.
With the economy now in shambles, Trump’s job will be easy. When 25M Americans are unemployed, Trump’s message about foreigners stealing jobs from Americans will be much more powerful. When the stores are running out of basic supplies, Trump’s call to expand the manufacturing sector will be cheered even more by his base. When the corn and soya plantation surge to new high, they impose ridiculous ban on our palm oil to help his farmer voters.
When countries which did a competent job in controlling the pandemic start to move ahead of the US, Trump’s call for nationalism will be met with more fervour by his supporters. I think Trump has begun to realize this. He’s started attacking China for this very reason and I think that we’ll hear a lot more of this until the election. Democrats can’t defend China in this. And they can’t attack China without making it sound like Trump was right all along about China. They are stuck between a rock and a hard place on this issue.
In reality, less than 50% of the American population go to vote for the Presidency. If Trump can get 26% of the population to believe him, he's going to win again. That looks quite easy considering nearly everyone in the farm & rural states will support him.
There are some interesting things going on. Almost the entire mainstream media in the US is AGAINST Donald Trump. The almost daily polls they are running are terribly skewed and show Biden leading Trump by light years. However, the situation on the ground shows something else. Granted there is a virus pandemic, social distancing rules and these are indoor rallies but there really are no crowds. Even his outdoor rallies attract 8 people, 30 cars and so on. One hack says in the past week or so Biden's rallies have attracted a grand total of 84 people.
In sharp contrast here is Donald Trump at a rally in Florida just yesterday. Despite the corona virus and social distancing over 40,000 people turned up to hear the President speak. Not exactly a clever thing to do but obviously they deem it worth the risk. This was President Trump's first public rally since his impressive recovery from the Corona Virus. And over in California - a Democratic stronghold - someone put up a giant TRUMP signboard on a hillside along a 10-lane highway. The California Highway Authority removed the sign as a traffic hazard. So there seems to be a disconnect between the on-the-ground popularity of Donald Trump and the weak support for Joseph Biden versus what the mainstream media is saying. Some observers are predicting a landslide victory for Donald Trump.
A report by CNN lists down the ways that Trump can LEGALLY & WITHIN THE U.S. CONSTITUTION BLOCK Biden from taking over even he lose the Election; & for sure all his team & lawyers are well-prepared to do this. Trump will not leave the White House win or lose. He will complete his 2nd term. This is why I think Trump is likely to win in November.
Maintain NEUTRAL; Top Picks: Serba Dinamik and Bumi Armada. We may see a downward revision in crude oil demand numbers by major agencies due to a resurgence of COVID-19 cases but OPEC remains committed in supporting prices.
Our 2021F crude oil price is now revised to USD51.00/bbl from USD55.00/bbl, while 2022 and long-term oil price forecasts are kept at USD55.00/bbl and USD60.00/bbl.
