Results

• Higher earnings - Bumi Armada reported 1Q21 PATAMI of RM162.8m compared to a net loss of RM219.5m in 1Q20 thanks to lower finance costs and higher other operating income. Excluding an impairment of RM314.4m in 1Q20, normalised PATAMI rose 80% YoY from RM90.4m in 1Q20.

• Steady revenue – 1Q21 revenue increased 2% YoY to RM562.7m due to higher contribution from Floating Production & Operation (FPO) (+7% YoY to RM495.1m) in relation to higher vessel availability for Armada Kraken. This cushioned the decline in Offshore Marine Services (OMS) (-25% YoY to RM67.6m) due to lower vessel utilisation rate of 44% vs 56% in 1Q20.

• Lower QoQ – As compared to the previous quarter, 1Q21 normalised net profit dropped 5% QoQ due to higher tax, lower revenue and lower share of results from JVs and associates. Quarterly revenue declined 9% QoQ as FPO revenue decreased 7% QoQ due to planned shutdowns of Armada Kraken and Armada TGT1 while OMS revenue decreased 20% QoQ due to lower vessel utilisation rate as a result of the monsoon season.

• Strong orderbook – Orderbook remains healthy at RM15.8b (FPO: RM15.1bn, OMS: RM0.7bn) with another RM9.9bn worth of potential extension. This will sustain the group’s revenue for the next few years.

Earnings Outlook/Revision

• Within expectation – 1Q21 normalised net profit of RM162.8m achieved 33% of our full year forecast of RM484.7m while three months revenue account for 21% of our FY21 forecast.

• Forecasts maintained – We are keeping our revenue estimate and EPS forecasts for FY21 and FY22 as we expect earnings to remain stable.

• Steady gearing– Total debt was reduced to RM8.1b from RM8.3b in 4Q20 after the company repaid RM349.9m in 1Q21. Bumi has secured extension of its Tranche 1 corporate loan final maturity from May 2021 to November 2022.

• Monetising assets - The management intends to exit the OSV business by year-end and has disposed 11 vessels in 1Q21 for a gain of RM7m with 16 vessels remaining.

Valuation & Recommendation

• Maintain HOLD with an unchanged target price of RM0.42 based on its base 3-year average P/B.

Source: JF Apex Securities Research - 27 May 2021