BAB’s  1H13  net  profit  of  MYR221.6m  was  within  our  but  below consensus estimates, at 48.0% of our and 42.8% of consensus full-year forecasts.  Revenue  grew  43.8%  y-o-y,  bolstered  by  improvements across all business divisions. Backed by an orderbook of MYR7.5bn for the  firm  period  and  MYR4.3bn  for  the  optional  extension  period,  we reiterate our BUY call on BAB with an unchanged FV of MYR4.40. 
 
- Within  expectations.  Bumi  Armada  (BAB)’s  1H13  net  profit  of MYR221.6m  (+2.1%  q-o-q,  +22.0%  y-o-y)  was  within  our  but  below consensus,  accounting  for  48.0%  of  our  and  42.8%  of  consensus  full-year  estimates.  The  earnings  improvement  was  supported  by  higher revenue (-1.5% q-o-q, +34.8% y-o-y), strongly lifted by its transportation & installation (T&I) division, which grew 103.8% y-o-y.  

- Total orderbook at MYR11.8bn. As at end-June, BAB’s firm orderbook stood  at  MYR7.5bn  (13%  from  offshore  support  vessels  (OSV),  17% from  T&I  and  70%  from  floating  production,  storage  and  offloading (FPSO)) while its optional extension period orderbook was at MYR4.3bn (23%  from  offshore  support  vessel,  77%  from  FPSO).  If  we  were  to include the latest contract win with LukOil worth MYR567.6m, BAB’s total orderbook would stand at MYR12.4bn.

- Another  FPSO  contract  soon?  During  yesterday’s analyst briefing, Management  mentioned  that  the  FPSO  contract  in  the  Madura  and Kraken  fields  could  potentially  be  awarded  as  soon  as  the  end  of September.  Clinching  both  jobs  would  be  a  strong  re-rating  catalyst  for the stock as its earnings visibility will be significantly boosted.  

- Maintain  BUY.  All  in  all,  we  remain  positive  on  BAB’s  prospects, underpinned  by:  i)  improving    demand  in  the    global  FPSO  market,  ii) steady  utilisation  rates  at  its  OSV  business,  iii)  its  plans  to  offer deepwater services, and iv) a potential upside from its new  floating gas solutions  business,  which  is  built  on  the  company’s  existing competencies. We reiterate our BUY recommendation on the stock, with our SOP-based FV unchanged at RM4.40, pegged to FY14 EPS.

Source: RHB