Bumi Armada (BAB) recorded core net profit of RM182.6m in 3QFY23, improving by +274.7% QoQ after Armada Kraken FPSO was fully restored in August 2023. On a YoY basis, the Group’s core net profit dipped 16.7% due to slightly lower uptime on its overall FPSO operations however. Cumulatively, BAB reported core net profit of RM439.9m (-29.4% YTD) for 9MFY23, lagging our estimates at 62.4% but in-line with consensus at 73.7% of full-year FY23 numbers. On the existing operations, Armada Kraken is now back to normal with first new transformer installed in September 2023 as scheduled. However, we cut our forecast for FY23F by 13% to account for a previously underestimated overall impact of Armada Kraken. We retain our Outperform call and TP of RM0.65 as we expect FPSO operations to remain stable, with its balance sheet also continuously improving.

• Results highlight. The Group recorded higher revenue in 3QFY23 by 18.9% QoQ to RM524.8m. This is due to higher uptime on the ArmadaKraken FPSO as it had been fully restored in August 2023. The overall uptime for its 4 owned FPSOs achieved 98% in 3QFY23 as compared to 93% in 2QFY22. Overall, the Group reported core net profit of RM182.6m,274.7% QoQ.

• Armada Sterling V is expected to see first oil next week though the acceptance test certificate is still ongoing with each test requiring 3-4 days.On its financing, the FPSO has successfully achieved financial close and has fully drawn down USD948m project financing facility to repay its USD930m bridging loan facility.

• Akia Production Sharing Contract (PSC). A consortium with 51%participating interest by Armada Akia was awarded the Akia PSC, covering an area of 8,394 km2 with estimated recoverable resource of 860 billion cubic feet (BCF) in the Tulip discovery. BAB expects to acquire 3D seismic imaging in 1Q-2Q 2024. The Group could leverage on its core expertise in providing and operating floating production systems as the water depth for the Tulip discovery is 800m.

• Madura FLNG. In September 2023, the Group entered into a non-binding agreement with PT Pertamina International Shipping and PT DavenergyMulia Perkasa (DMP) for the development and commercialization of Liquefied Natural Gas (LNG) from Madura Gas field and its surrounding areas. We see the likelihood of this materializing after factoring its success in LNG FSU Malta and its familiarity in the Madura BD field via its partnership in FPSO Karapan Armada Sterling 3.

Source: PublicInvest Research - 17 Nov 2023