Hong Leong Investment Bank (HLIB) said these factors would lead to material contributions from Armada Sterling V upon final acceptance in the first quarter of 2024 (1Q2024), based on its estimates.

“The Kraken FPSO, constituting 35% of the group's financial year ended Dec 31, 2022 (FY2022) top line, has been fully operational since early August, and we anticipate its full impact to be reflected in 4QFY2023 earnings,” HLIB said in a research note on Wednesday.

Looking ahead to FY2024, the research house expects maiden contributions from Armada Sterling V to serve as a booster for the group's earnings, projecting an 11.2% year-on-year increase in its bottom line.

“We are upbeat on the FPSO space, driven by the prevailing tight market conditions that empower players like Bumi Armada to negotiate favourable rates for potential new job wins,” HLIB said.

Nevertheless, being in the capital-intensive FPSO business, HLIB said Armada's disciplined approach to capital management in recent years had led to a consistent decline in its net gearing, decreasing from 2.95 times in 1Q2020 to 0.66 times as of 3Q2023.

“This prudent financial approach positions the group favourably to leverage opportunities for new projects,” HLIB said.

Hence, the research house maintained its "buy" call on Bumi Armada, with a target price of 71 sen.

At 11.07am on Wednesday, Bumi Armada shares had risen by half a sen to 50 sen each, with 9.39 million shares traded.