Bumi Armada's FY11 results were below consensus but aboveour estimates. Overall, there was higher contribution  from its FPSO operations in Australia and India,as well as improved vessel utilization rates. We are  tweaking upwards our FY12 earnings forecastby 3% to factor in the possibility of the company securing new FPSO contractseach for FY12 and FY13, but towards year-end. Maintain Neutral, at a higher FVof RM4.37 (previously RM3.55), based on existing sum-ofparts valuation.

Above expectation.Bumi Armada's FY11 results were below consensus but above our expectations,making up 89% and 106% of our forecasts. Although its 4QFY11 revenue of RM370.9mwas lower by 8.2% q-o-q due to the lower FPSO revenue in relation to engineeringservices recognized from Apache, its EBIT of RM167.3m  was 30.4% higher q-o-q in view of the lowerlisting expense of RM1.2m charged in 4QFY11 versus RM20.3m in 3QFY11, as wellas improved fleet utilization. YTD, both Bumi Armada's FY11 revenue and profitbefore tax  surged 24.4% and 13.7%respectively to  RM1,543.9m and RM435.9m,contributed by new FPSO contracts from Apache and ONGC, the higher utilizationof its  OSVs and the higher utilizationof its DLB, which started operation in Turkmenistan in May 2010.

Upgrading our FY12earnings forecast by 3%. We note that the positive sentiment as well as thegroup's number and value of new O&G contracts won have been increasingyo-y. Hence we are incorporating into our forecasts the potential of BumiArmada securing a new FPSO contract each year for FY12 and FY13, but for thesake of prudence, we are only expecting the income to stream in towardsyear-end.

Maintain Neutral.We are raising our fair value for Bumi Armada to RM4.37 (previously RM3.55),based on  the stock's  existing sum-of-parts valuation following ourearnings upgrade. The group's strength lies in its ability to provide one-stopsolutions starting from O&G exploration to the  decommissioning stage. Also,more than 70% of its business generates recurring income and  a constantcash flow to the company, which is an important factor, especially since theglobal economy is currently facing many headwinds.

Source: OSK188