We maintain our BUYcall on Bumi Armada, with an unchanged sum-of-parts-based fair value of RM5.05/share, which implies an FY12F PE of 26x. 

We maintain FY12F-FY13F earnings as FY11 net profit of RM360milwas in line with our expectation ' 5% below our forecast and 3% below streetestimate's RM369mil. We introduce FY14F net profit with a 14% growth, assumingthat the group's floating production storage offloading (FPSO) fleet increasesby one to 10. 

Our forecasts had earlier already incorporated two new FPSOcontracts awarded last year:- (1) the Armada Clair floating, production,storage and offloading (FPSO) charter from Apache Energy Ltd at WA-49-L of theBalnaves Field, Northern Carnarvon Basin, offshore north-west Australia; and(2) the 50:50 JV with Forbes for ONGC's D1 Mumbai field in India. We haveintroduced FY12F-FY14F DPS based on a payout ratio of 15% given the group'ssurprise FY11 tax-exempt dividend of 2.5 sen.

QoQ, the group's 4QFY11 net profit rose 35% to RM125mil dueto:- (1) higher FPSO revenues from the Australian Apache and India's D1contracts, and (2) higher transport and installation (T&I) from the ArmadaInstaller's 70% capacity take-up guarantee by Petronas and completion of theSepat Floating Storage Offloading unit installation, 3) rise in vessel utilisationfrom 96% from 93% in 3QFY11, and 4) absence of the RM27mil listing and calloption expenses incurred in 3QFY11.

Including renewable options of RM3.1bil to the group's firm ordersof RM6.9bil, the group's order book of RM9.9bil represents 4.3x FY12F revenue.This is likely to increase as the group is currently bidding for six FPSOcontracts in Malaysia, Indonesia, India and West Africa.  Bumi Armada, together with Delcom-EmasOffshore being the only two bidders for the St Joseph chemical enhance oil recovery(CEOR) vessel, expects the award within the next 2-3 weeks. There could also beanother chemical CEOR prospect in the Angsi field, Sabah. Additionally, thegroup, together with MISC-Ramunia, is bidding for Hess' FPSO charter in theNorth Malay basin.

Besides FPSOs, the group is also tendering for T&I jobs worthUS$250mil in the Caspian, Nigeria, Angola and Australia. Amid tightening vesselutilisation, the group plans to acquire or build up to 10 offshore supportvessels, mainly in platform support or accommodation work vessels.

We continue to like the stock, given that re-ratingcatalysts stem from :- (1) Rising likelihood of new FPSO contracts as oil &gas developments reignite globally; (2) tighter vessel utilisation rates; (3)potential marginal field excitement; and (4) premium scarcity for oil & gasstocks with large market capitalisation.

The stock currently trades at an attractive FY12F PE of 20x comparedwith Dialog Group's peak of 40x in 2007.

Source: AmeSecurities