Bumi Armada’s (BAB) FY13 core net profit of MYR418.4m was below expectation, making up 91%/85% of our/consensus’ estimates. Higher depreciation cost, lower fleet utilization and start-up costs at the Kraken FPSO project dragged down its FY13 performance. Maintain BUY, with a lower SOP FV of MYR4.35 (from MYR4.50), to reflect our conservative view on potential FPSO option extensions.

• FY13 numbers below expectation.BAB’s FY13 full-year core net profit of MYR418.4m fell short of our/consensus’ expectations, making up 91%/85% of the full-year estimates respectively. The weaker-thanexpected numbers were attributable to higher depreciation costs in FY13 arising from: i) the change in the useful life of selected vessels; and ii) more vessels acquired during the year. This led to the operating profit (OP) margin in the offshore support vessel (OSV) segment declining to 20% in FY13 vs 24% in FY12. We note that full-year revenue rose 25% as BAB started to recognize contributions from the Kraken floating production, storage & offloading (FPSO) project it secured in Dec 2013. It has proposed a dividend payout of MYR95.3m, equivalent to 22.1% of net profit, or MYR0.0325/share tax-exempt, for FY13.
• 4QFY13 generally weaker q-o-q and y-o-y. 4QFY13 ended unusually weaker. Cost of goods sold (COGS) rose 35% y-o-y and 27% q-o-q, possibly due to the start-up costs at the Kraken FPSO project. The 4QFY13 earnings were partly helped by the change in estimate of deferred taxes on BAB’s FPSO projects.
• Extending an FPSO contract.BAB also announced the contract extension on the FPSO, Armada Perdana, for deployment in Nigeria for two more years. We make no changes to our estimate as we have incorporated the MYR360m extension into our forecasts.
• Maintain BUY, with lower FV of MYR4.35.We keep our FY14/FY15 forecasts and reaffirm our BUY call on BAB, but with a lower FV of MYR4.35 (from MYR4.50), due to: i) the healthy demand for FPSO globally; and ii) potential FPSO contract wins in FY14. Other segments within the group tend to benefit as well when it wins an FPSO contract as the group also provides other ancillary services. Our lower new SOPbased FV of MYR4.35 reflects our conservative stance in recognizing contribution from the FPSO option extension periods on certain contracts.

Financial Exhibits

SWOT Analysis

Company Profile 
Bumi Armada provides one-stop vessel solutions relating to floating production, storage & offloading systems, transport & installation, oilfiled services, and procurement & construction.

Source: RHB