Bumi  Armada  (BAB)’s  9MFY13  core  net  profit  was  in  line  with  our expectation  but  below  consensus,  at  70%  and  65%  of  both  full-year forecasts respectively. 9MFY13 saw markedly better revenue from all its business  segments.  We  remain  positive  on  BAB’s  outlook  in  view  of potential contracts. We keep our FY13 and FY14 earnings estimates and our SOP-based FV of MYR4.40. Maintain BUY.

• 9MFY13 core net profit in line with our full-year estimate, but below consensus.  BAB’s  9MFY13  core  net  profit  was  15.3%  better  y-o-y  at MYR324.2m,  making  up  70% and  65% of our and consensus’ full-year estimates respectively. The increase was largely due to improvements in all of the group’s  business segments. Its profit before tax (PBT)  jumped 17.9%  y-o-y,  boosted  by  higher  contributions  from  its  joint  ventures (+38.5% y-o-y). 
• All business segments  fared better.  9MFY13 revenue  improved  y-o-y mainly  due  to:  i)  higher  operations  and  maintenance  revenue  from clients’  variation  orders,  ii)  sustained  uptime  for  its  larger  vessels,  iii) revenue received from additional vessels during the period ,  and iv) the ramping up of activities  at  the  LukOil project awarded in Apr 2012.  The transport  &  installation  (T&I)  segment  saw  its  9MFY13  operating  profit margin (OPM)  deteriorate to  21.8% vs 36.3% in 9MFY12 due to higher depreciation costs arising from having more vessels.
• Another FPSO unit joins the fleet. We are excited with the execution of the Kraken  floating production, storage and offloading  (FPSO)  contract, which BAB expects to execute before 30 Nov. We also understand that it has  bid  for  the  supply  of  an  FPSO  to  the  Madura  field  in  Indonesia.Upstream reported in August this year that BAB was the frontrunner.
• In  bid  for  Pan-Malaysian  T&I  projects.  The  market  has  been  abuzz with news on the potential  award  of T&I projects, especially Package A. We believe that BAB would  be  more  keen  on the  later  packages  -  C, D and E - that could fetch better profit margins.    Maintain  BUY,  with  MYR4.40  FV.  We  keep  our  FY13  and  FY14 numbers  unchanged  as  we  expect  more  details  on  the  Kraken  field FPSO contract  to unfold.  As such, there is still more upside to our FY13 and FY14 earnings estimates. We keep our SOP-based FV of MYR4.40 and our BUY recommendation on BAB.

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Company Profile
Bumi Armada is 1-stop vessel solutions via its floating production, storage & offloading system, transport & installation, oilfiled services, procurement & construction

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Source: RHB