Bumi Armada has signed a contract to supply a FPSO to Husky-CNOOC Madura Limited. The contract was awarded to a consortium comprising of the  group’s  wholly-owned  subsidiary,  Bumi  Armada  Offshore  Holdings Limited  and  its  49%-owned  joint  venture  company,  PT  Armada  Gema Nusantara (PT Gema Marine Services owns the remaining 51% stake). The FPSO will be deployed to the BD Field in the Madura Strait, Indonesia, in 4Q16.  The  US$1.2bn  (RM4bn)  contract  is  for  a  firm  charter  period  of  ten years with options of five annual extensions. (Source: Bursa Malaysia)

Comment:  We  are  positive  on  the  signing  of  the  Madura  FPSO  contract. While the contract signing is within our expectations, it will help to ease the anxiety  of  some  investors  who  were  concerned  on  possible  project cancellation due to multiple delays in the contract signing (LOI was signed in  August  2014).  No  change  in  our  earnings  forecast,  BUY  rating  and SOTP-derived  TP  of  RM1.70  as  we  have  imputed  the  contract  in  our earnings model.

Source: Affin Hwang Capital Research - 12 Dec 2014