Bumi Armada; Fully Valued; RM3.94
Price Target: RM3.30; BAB MK

Pursuant to BAB’s US$200m EPIC contract award from Russian oil major, Lukoil in Apr12, BAB has entered into a supplementary agreement with Lukoil for an additional works worth RM567.6m (US$178.5m). The contract entails engineering, procurement of the line pipes, installation and pre-commissioning of six infield/inter-field lines, for a total length of c.40km, which will be serviced by its derrick pipelay barge, Armada Installer.

We estimate its order book to stand in excess of RM8bn with this latest contract win. Nevertheless, we retain our earnings forecast as most of the construction work will be carried out and completed in 2015 which has already been imputed in our financial model. We believe that the stock’s demanding valuation of 22x FY14 PE has priced in its future growth prospects. Reiterate our Fully Valued rating which implies 16% downside potential.

Source: HwangDBS Research - 8 Jul 2013