Investment Highlights

• Bumi Armada’s (BAB) 3QFY17 reported net profit ballooned to RM123.7m

• Gain on disposal of RM74m for Armada Intreprid recorded

• 9MFY17 normalised earnings within estimates

• Firm orderbook stands at RM22.7b

• OSV utilisation rate in 3QFY17 rose to 54%

• Maintain NEUTRAL (with positive bias) with unchanged TP of RM0.85 per share

Earnings boost from disposal of asset. BAB’s 3QFY17 reported earnings surged to RM123.7m largely due to the disposal of Armada Intreprid. Excluding gains on asset disposal, impairments, write backs and other non-operational gains, BAB’s normalised 3QFY17 earnings came in at RM59.4m. The company’s cumulative 9MFY17 normalised earnings of RM206.3m kept pace with our expectation, accounting for 72.8% of our full year forecasts but lagged consensus estimates by a variance of more than >10%.

FPO (previously FPSO & FGS) segment. Segment revenue doubled to RM980m while segment profit recorded RM326.8m compared with a loss a year earlier. The commendable results are attributable to higher contribution from Armada Olombendo FPSO and Armada LNG Mediterrana FSU. The company’s FPSO fleet recorded uptime of 99%.

OMS segment. The Offshore Marine Segment (OMS), an amalgamation of the offshore support vessel (OSV) and Transport & Installation (T&I) segments also posted commendable rise in revenue of +5.1%yoy while registering cumulative profit of RM124.3m compared with a loss a year earlier. The commendable earnings are a result of a one-off revenue recognised based on work completed on the LukOil project arising from signing of the supplementary agreement and also higher OSV utilisation rate of 54% for the quarter.

Impact on earnings. No change to our earnings estimates.

Orderbook. The company’s latest orderbook as at 30 September 2017 stands at RM22.7b compared with RM23.7b as at 30 June 2017. 92% of the orderbook consists of FPO contracts (RM20.8b) while the remaining 8% are OMS jobs (RM1.9b). The optional extension orderbook stands at RM13.1b.

Source: MIDF Research - 24 Nov 2017