Bumi Armada; Buy; RM4.30
Price Target: RM5.00; BAB MK
Bumi Armada announced that it has clinched a 4-year contract for its platform supply vessel (PSV), Armada Tuah 301, estimated to be worth RM115m, from Petroleo Brasileiro (Petrobras). The contract comes with an extension option of 4 years and is expected to start contributing by 2Q12.

Armada Tuah 301 is a 75m long, 3000DWT PSV with DP2 capability which will be used for supporting operations with multi-purpose functions of transporting cargo (water, diesel, bulk cement, materials, equipment etc) between platforms, rescue and personnel transfer for Petrobras.

The marine charter contract marks Bumi Armada's 3rd vessel in Brazil which underscores Bumi Armada's competitive advantage in securing contracts abroad. The daily charter rate is estimated at US$26k, which is slightly higher than the global average of US$22-23k for medium-sized PSVs. To recap, Bumi Armada first forayed into Brazil with Armada Tuah 104 (AHTS vessel) in 2011 and secured its second Petrobras' contract with Armada Tuah 102 in Jan12 (AHTS vessel). Current fleet utilization remains in excess of 90% which is far superior to the local OSV peers which registered poor financial performance in FY11.

We maintain our earnings forecast at this juncture as we have earlier imputed the contribution from its new PSV in FY12. We continue to like Bumi Armada given its diversified earnings base with large exposure to the growing O&G sector in Asia and Africa. We reiterate our Buy call with RM5.00 TP. We believe that Bumi Armada is a world champion in the making with synergistic O&G services leveraging on geographical expansion.

Source: HwangDBS Research 22 March 2012