Bumi Armada announced that the LOI issued by Husky-CNOOC for the provision  of  an  FPSO  (Madura  FPSO)  will  be  extended  until  27 November  2014.  This  is  the  third  extension  for  the  US$1.2bn  Madura FPSO contract where the first LOI was signed in August 2014. (Source: Bursa Malaysia)

Comment:  We  are  neutral  on  the  extension  of  the  LOI.  Delays  in finalisation  of  long-term  contract  is  not  uncommon  in  the  oil  &  gas industry.  We  maintain  our  earnings  forecast  and  expect  the  Madura FPSO contract to be finalised in 2015. Maintain BUY on Bumi Armada with an unchanged SOTP-derived target price of RM1.75.

Source: Affin Hwang Capital Research - 13 Nov 2014