Bumi Armada (BAB)’s 1QFY13 net profit of MYR109.7m was below our and consensus  expectations.  Given  that  the  company  has  still  not  secured  a second  FPSO  contract  going  into  2H13,  we  lower our  FY13  and  FY14  net profit forecasts. That said, we maintain our BUY recommendation, with our FV revised slightly higher to MYR4.40 as we roll over our valuation to FY14 EPS.

- Missing estimates. BAB’s revenue jumped to MYR488.8m (+45.8% y-o-y, +2.3%  q-o-q),  lifted  by  its  new  floating,  production,  storage  and  offloading (FPSO) contract from Oil and Natural Gas Corp (ONGC, NR) in India for the C7 field, which was secured in mid-Feb. Consequently, its net profit came in at  MYR109.7m  (+0.5%  y-o-y,  +22.3%  q-o-q),  below  both  our  and  the consensus  expectations,  and  accounting  for  only  20.2%  of  our  and  20.3% of consensus’ full-year estimates.  

- LukOil  project  lifts  revenue.  BAB’s FPSO division registered a  revenue growth of 15.9% y-o-y owing to a new contract from ONGC. Meanwhile, its offshore  support  vessel  (OSV)  division’s revenue  jumped  24.6%  y-o-y  as the  company  added  more  vessels  to  its  fleet,  thereby  boosting  its  uptime. Meanwhile, revenue from its transportation & installation division surged by 200.4%  y-o-y,  boosted  by  contributions  from  the  LukOil  project  secured  in April 2012.

- Lowering estimates. As BAB has yet to secure its second FPSO contract going  into  2H13,  we  lower  our  FY13  revenue  forecast  by  8.5%.  However, we retain our FY14 revenue forecast as we ascribe two FPSO contract wins for that period. That being said, we lower our net profit forecasts by 14.9% for FY13, in line with the decrease in its forecast revenue, and by 7.9% for FY14,  as  we  incorporate  higher  depreciation  expenses  due  to  the  new vessels added.

- MYR12.2bn-strong  order  book.  The  company’s  order  book  stood  at MYR12.2bn as at end-1QFY13, of which MYR7.9bn is in firm contracts and MYR4.3bn in optional extensions.

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Source: RHB