Armada seems getting attractive at this price range but its lack of new business bothers me somewhat to repurchase back some of what I sold off at average 58.5 sens a few months ago. Painfully or otherwise , I am still holding 30 % of my peak holding volume of Armada shares; it is a love and hate story with Armada for the last 9 years. Loving it for its seemingly stable business with long term FPSO contracts till the Woodside project cancellation and Armada lost in its legal process with client. Its current free cash flow is also attractive and has been properly utilized to pay down it huge debt. Hating it for its series of poor management antics track records with shareholders and more importantly for Not getting new business since Sterling V project. Market punish the shareholders with low prices due to lack of confidence due to its series of shortcoming . Nevertheless It has been my largest investment in my share investment portfolios all these years until lately. I made fair amount of money trading it partially to make up for Zero dividend in the last 9 years due to it price volatilities but I also absorbed missed opportunities costs for not investing in other " better" stocks all these years. I am wondering if time is running out for me with this love and hated stock while I tried investing in other stocks for the last 2-3 years but the lingering itch with Armada is still there ; perhaps waiting for its price to drop further to reach good reward/ risks ratio once again. I am struggling with this mixed love/hate sentiments with Armada as sometimes I wonder if Armada is a speculative or investment grade stock for me. I guess it all depends on our stock entry price .

Thanks Niki, for your excellent write up on Armada.
It reveals some hidden potential for BA. Armada price is getting attractive once again.Tempted to add back part of what I sold earlier in stages if it falls a little further.

RayLee, anything happened to Ananda lately ?

Though I have disposed much of Armada shares and left with about 30 % from the peak holding, I feel pathetic for its poor price performance lately. Is the market so lack of confidence in Armada business and indirectly reflecting its no growth in its FPSO new business. The major shareholder needs to shake up the board and consider getting rid of its MD.

The only saving grace for BA is its current Free Cash Flow but given the existing FPSO contracts are approaching the end of contract period subject to potential extension at reduced charter rates; I wonder what the impacts on the Free Cash Flow in near future are. BA looks more like a sunsetting company but with boastful ambitions of going carbon capture applications which shall not be in time to replenish its Free Cash Flow generations when its FPSO entering end of contract or lower charter rates period.

Frustrated by lack of business growth by BA for so many years and its lethargic stock price , I sold another 30 % of my total holding around 56-57 range lately. I am left with 1/3 of BA shares versus my record holding of BA shares. It has been 9 years of investing in BA and throughout the years of up and down, I bought and sold about 1.5 Millions shares in between the years to compensate for lack of dividend. Even though it is my most profitable stock in terms of values, I have decided to let go of my BA in stages as I can't see the current BA management doing much to get new contracts in its core business. It is sad.

@Nikicheong
The question of less paydown of debt and noticeable cash building up in the Q1 FY 2024 was posted by an active participant in the additional question session. Luke seemed pleased this was noticed and asked ; he affirmed the cash was built up intentionally instead of usually paying down the debt. Luke has also confirmed no right issue plan in near future oi another question. I sensed the management is preparing for project funding based on these answers. I failed to screenshot the Q&A session.
Thanks for answering my question on FPSO Kraken's remaining book value.

Further thinking about Gary's comment that the management decided not to take on an FPSO project as the risk / reward valuations is not in favor of Armada is something worth taking note of. If it is true, it may mean Armada is selective in their look out for better contract instead just for the sake of getting business at low margin high risk. Sapura Energy fell into big black hole and ended up bankrupt as the previous MD was taking on too much projects at low margins during the oil and gas boom period. I am still feeling the pain of my biggest loss cutting process a few years ago.

I was on the verge of cutting down my holding of Armada shares pending the release of the latest quarter and the AGM. Luke's answer to the question in AGM on intentionally hold back paying down the debt but build up the cash hints of something is up soon and his affirmation of no plan for right issues is also assuring. It is good to know Sterling V full acceptance is around June this year. Good Q 1 2024 results , so I hold back selling a big potion of Armada shares holding for now though I was pessimistic as well lately of Armada. Armada shares high traded volume today with 2 Sens rise seems encouraging as well. I wonder if Armada Kraken is fully amortized by the end of its fixed contract and before the starts of the optional extension contract ? Anyone has any idea ?

Big impairment at the most profitable quarter or year may have its tax benefits as it reduces the taxable income for the year. Is this one of the hidden reasons for the timing ?

Impairment means bringing the depreciation costs forward earlier hence future depreciation costs are going to be lower. Cash flow is not immediately affected negatively next few quarters before Kraken new extension contract kicks in after 1 April 2025. Armada still has about a year before the management finds new source of income though I cant see where can they find it.

may need 2-3 quarters of good results to restore market confidence .

Market reactions are not as bad as I was expecting.

Thanks Niki for your latest update of Kraken's potential development.

Tq Niki for your latest brief on Armada Sterling II, Armad TGT and Armada Kraken respective extensions. You are very helpful to share your insights.💎

My patience for Bumi Armad is wearing very thin lately after 9 years of holding it as flagship investment. Apart from strong FCF paying down the borrowings fast, I have not seen much business progress in Armada in the last 3-4 years. I am waiting for the coming quarterly report before deciding what to do with Armada. Reflecting back, the only saving grace I have for investing in Armada is to trade some portion of my holding over the years and buy back when it dropped back again just to compensate for no dividends over the years. I do made good money out of this mode so far.
Though not 100 % comfortable doing this as I had fairly strong belief in its business model but it seems the successive MDs have not been able to grow the company well enough to create more values. The Board of Directors need to be shaken out for successively selected mediocre MDs in the last 9 years.

Happy Chinese New Year to members in this chat group. May we all prosper in Dragon Year.

AK would be very happy if Armada price is so low enough despite strong free cashflow the last few years for him to take it private at great profit ; this real or imaginary threat I have not discounted so far. Fingers crossed.

Thanks to all for the update of Armada Sterling V first oil. It would be a BIG morale booster to the market including us, should the management declare some dividends after the next 2 quarters of profits wipe clean the accumulated losses. However, be prepared for the management to prioritize debt repayment than paying dividends; as there is no immediate new profit generating project coming on stream to boost the profit further.

@ TimCoke, yes I also suspect the market is overreacting and some big players are pressing the price down to accumulate. Good for investors who dare to go against the market sentiments , it seems.

I am also waiting for 48 sens to top up.

How bad can the impact of Sterling V first oil delay versus Kraken shut down before? Are the investors including some here overreacting to this Sterling V first oil delay further preceded by many delays already? Is the Armada's 30 % share of this FPSO so critical that it may disrupt the free cash flow that Armada is generating now from overall operations? I look forward to some wisdom sharing from our wise investors here. Thanks

Thanks to everyone sharing your thoughts on Armada and especially to Niki for very detailed analysis. I do agree the real threat to Armada is no apparent growth catalysts now except some hope on extensions of contract options. We keep hearing some indications/news of some new project but very little update from management on these. Hearing some distant thunders but yet to see the rains. Yes, we shall wait a little longer to see if the current management team can show their worth . Thanks

I invest in Armada share since 2015, seen its worse performance over the years and a very short time its price went beyond 72 sens in March this year. I am wondering why the market has not given its support to Armada share price despite its debt level has been paid down from RM 13.8 B ( 239% debt to equity ratio) in 2017 down to RM 5.22 B in Sept 2023 ( 88 % Debt to equity ratio). is it the Armada management has failed to improve the market confidence in them or the major shareholder of Armada ? Armada current PE ratio of 4.5 is simply too low in view of its double digits ROE ( last 3 years) strong cash flows ( last 4 years). Is this strange phenomenon due to some big sharks manipulating its price to shake off small investors before the final pushing up of its share price or otherwise taking it private again ?

@ Macgyver111 "Hari2 gaduhkah dlm ni blog...semua mcm budak kindergarten. You all arguing each other also no point..stock market doesn't care any shit of that so why spend your valuable energy and time for non value add argument."

Agreed with your comments on the incessant squabbling among some members here, making this forum noisy for nothing. We are here sharing our insights or useful information for profitable share investment but not proving who is smarter. Everyone makes mistakes in share investment from time to time; so we need to have useful discussions here.

Steady, fellow investors, Armada price has been fairly volatile for whatever reasons for so many years. It has been having high ROE , good net margin plus strong free cash flow over the last 2 1/2 years, hence its intrinsic values are above current price. Dont go panic unless Kraken and Olembendo sink or exploded 😅

I wonder if it is an industry phenomenon as Hibiscus share price is also dropping 4.5 % this morning

We cant completely discount the chance of extension of existing FPSO contracts given good oil prices making the FPSO viably profitable for all parties,

Well said Niki, await positive news from BA , if any, to boost market confidence.

To quote Phillp Fisher in his book "Common Stock and Uncommon Profit" , he wrote " The conservative investor must be aware of the nature of the current financial-community appraisal of any industry in which he is interested. He should constantly be probing to see whether that appraisal is significantly more or less favorable than the fundamentals warrant. " He also wrote " any individual stock does not rise or fall at any particular moment in time because of what is actually happening or will happen to that company. It rises or falls according to the current consensus of the financial community as to what is happening and will happen regardless of how far off this consensus may be from what is really occurring or will occur ". I see Armada is currently recovering from years of financial troubles and its poor image in the market. The investing community is still apprehensive of any risk of disruption to its good cash generating operations to pay off the loans in the rising interest rate scenario and has not forgotten some goof ups in its Offshore Vessels business and cancellation of a FPSO contract due to poor management. Hence, the market assigns low PE valuations to Armada relatively to Yinson , for example. However, once this poor image is progressively addressed by eliminating the outstanding negative share shareholder equity and further loan reduction in the next few quarters, the market may switch to giving higher valuations to a more profitable Armada. The bad memory of Armada was taken private once before, and the Kraken incident with the subsequent lack of timely proper updates by seemingly arrogant management did not help to restore the market confidence soon enough. Hopefully, the management start to be more respectful of the investing community by keeping us informed adequately to regain more market confidence. With coming good fundamentals , it may boost the investors community's confidence in Armada. I am keeping my finger crossed for the better acceptance of Armada by investment community, hence fair valuations to be given in near future. A P/B of 1 or a PE of 10-12 can be a reality in the next 2 to 3 quarters. Be dare to dream and keeping our faith in Armada business fundamentals have changed for the better, my fellow investors here, now we just wait for the poor market image to be corrected. I risked being corrected as before.

Thanks Niki for the positive news. Look forward to breaking the 58.5 and 72 sens barriers soon

# Rohan, yes, it is still good to pay down the debt as much and wait till the accumulated losses of owner equity are eliminated. Reducing the debt is equivalent to growing the company' net profitability through the interest costs savings and reduce impacts of interest rate changes. Psychologically the market perhaps needs a boost for a " maiden " dividend from Armada, since the last one in 2015.

While we may applaud the prudence in the paying down of the loans aggressively by Armada management ,we should not accept the negligence in preventive maintenance or lack of redundancy in crucial system on Kraken. The MD should take a pay cut for lack of foresights in ensuring no production disruption in such an important asset. This costs the shareholders hundreds of million. He simply ignores the need for timely updates with shareholders as well.
Is the market still reflecting lack of confidence in Armada’s leadership despite the strong free cash flow that should give Armada stock better valuations? We can’t rule out AK may take Armada private once again if it is valued too cheap after its debt is paid down. I hope my such fear is unfounded.

@ Nikicheong, yes it can also be beneficial to investor if Armada management can make use of the future free cash flow to generate high ROE in the new investments instead of distribute the cash as dividends. The latest Kraken event and lack of timely updates subsequently does not help create trusts.
Dividends may help gaining some interests among sceptical investors who want to see some cash returns sooner instead of waiting in some blur visions due to poor investors relationship management by Armada.

It would take another 2 quarters profitability to remove the accumulated losses of the owners' equity (- RM 447 K ) before Armada is allowed to declare any dividend from its future profit. The market would accept its valuations better than now, I hope.

Reply @ NikiCheong
"Big guns buying or insiders know something's up."
Heard of some news on this from any source ?

Time for a step up of price , Armada, long overdue .

Robert and Nikie, thanks for your interpretations of the UOB's comments on the ICOP which I find it perplexing as if BA management is so laxed, for such matter of great concerns. The lack of update during Kraken's shut in has reduced my confidence of BA current management, to say the least. These few days the BA share price was on the retreat, it can be a good opportunity for some further accumulation if it goes down further , though I am concerned for BA's lack of new projects while some existing contracts are up for contract extension.

Can anybody who has knowledge of FPSO comment on the concerns indicated by UOB on the Kraken's Infrastructure Code of Practice shows all processing equipment were expected to reach ullage from 2023 . The BA management has no clear plan to perform diagnosis on the entire top side equipment to reduce surprise breakdowns once again.

The lack of update on Kraken during the shut in period from Bumi Armada Management have negative impact of my trust of them greatly. However, I have added more Bumi Armad shares during the during the crisis based on Bumi Armada business model and the strong free cash flow of the business in the last few years. It is still the flagship in my share investment portfolio.

Why bother arguing who really makes money or go bankrupt incessantly? Just make up your mind if you are a pure trader or long term investor or a hybrid investor how sometimes take profit partially when the price is deemed alright to you. No one can forever boast all the time 100 % accurate in buying or selling shares at the right price. I remember there was a person who is called Investor King used to announce he makes good money trading Armada in this forum almost a few times each week . Now I don't see him in this forum; I wonder if he gave up trading Armada shares already?

The current NTA of Armada is 89 sens/share ; its current share price of 49 sens provides about 45 % discount. For an asset that produce so much cash flow each quarter, it is very attractive. Profit is desirable but its Net Operating Cash Flow higher than profitability is even more valuable.

Not all earning are with some cash flow. Armada net operating cash flow after loan interest is about RM 1 billion per year but with a market capitalization of RM 2.8 billions is very attractive. The market confidence in management has certainly taken some beatings due to the poor handling of keeping the investors informed progressively.

@ NikiCheong "After the recent purchases, my average is now RM0.295. Prior to that it was RM0.262. I have been forced to "average up" each time. My original buy back in October 2020 was 350k at 22.5 sen "
17 minutes ago
Hi Niki
Did you ever trade Armada shares in between Oct 2020 till now or you just keep adding when the prices moved ? If you did sell some of Armada shares holding then did you deduct the profit you made from the sales to offset your overall invested costs in Armada share to arrive at your average cost of existing holding ?

https://pinpoint-insights.com/interx/tracker?op=click&id=1c07f.1aee&url=https%3A%2F%2Fresearch.rhbtradesmart.com%2Fdownload.php%3Ffile%3D616886152257091264937bbca8598&_hC=CEEC5253

RHB analyst reports on 23 June
 Keep BUY and SOP-based TP of MYR0.73, 51% upside. We are longterm positive on Bumi Armada’s MoU with Navigator Holdings – this could
potentially generate a new source of income for the former as it embarks on
a global energy transition agenda. Our call is still premised on the
assumption that the Kraken shutdown will be resolved in the short term.
 To provide CO2 solutions. BAB announced the signing of a non-binding
MoU with Navigator Holdings, the owner and operator of the world’s largest
fleet of handysize liquefied gas carriers, to establish a JV company (to be
owned equally) to provide CO2 shipping and injection solutions in the UK.
The JV is looking to design and implement a value chain of shuttle tankers
delivering to a floating carbon storage & injection unit. It is estimated that
the potential market in the UK is over 30m tonnes of CO2 pa from emitters
that are not proximate to the existing awarded carbon capture, usage and
storage clusters. Both parties are in initial discussions with a number of
emitters, and if successful, the first shipment of CO2 is anticipated to take
place three years after taking the final investment decision.
 Minimal earnings impact for now. Overall, we are long-term positive on
the venture – this could potentially generate a new source of income for
BAB as it embarks on a global energy transition agenda. It was stated that
the company operates the only FPSO which uses an amine recovery
system to extract hydrogen sulphide (H2S) from production gas, similar to
what is used in many of the CO2 capture-recovery systems worldwide.
However, pending further details from management, near-term earnings
impact is likely to be minimal, and funding requirement would depend on
the size of the project pipeline. As such, we maintain our earnings
estimates.
 Kraken status. Separately, BAB announced that following the recent startup of the Kraken FPSO, production is currently at c.60% of pre-shutdown
level. There is still further work, testing and investigations ongoing to
stabilise and bring the vessel’s operational performance back to preshutdown level. According to upstream, the UK’s Health & Safety Executive
(HSE) is examining the circumstances that led to the shutdown. It was also
reported that only one of the four hydraulic submersible pumps (HSPs) is
available for use, while the other three need to be replaced. Note that
Armada Kraken accounted for >30% of our valuation and any long-term
disruption would present a downside risk to our TP, which implies FY24F
P/E and P/BV of 5.4x (below its 5-year mean of 6x) and 0.6x (below +1SD
from its 5-year mean). It also incorporates of a 6% ESG discount, based on
our ESG score of 2.7.
 Downside risks: Contract cancellations, failure to win new contracts, and
a further deterioration in Armada Kraken’s operation

Well done Niki and SSlee also. Thanks for your letter to Bursa on this matter.

Yes I agree with you Robert, Gary , the MD of Bumi Armada is showing poor leadership in this FPSO Kraken's transformer issue management for failing to keep investors updated on the progress of sorting out this issue weeks after the initial announcement. It appears Armada has no respects for the investors' need of clarity on what is going on in FPSO Kraken. Either Bumi Armada has very poor investor relationship management or deliberate holding back of information for some agendas?

Fear mongering and panic reinforce each other in market spiraling down leading to under valuation.

Bumi Armada is 1 stock that is quite complicated for general investors to comprehend its nature of long investment cycles, long term contract and its inherent risks in its operational complexity. This latest hiccup after the nearly perfect track records of FPSO Kraken's uptime in the last 3 years still bring back some guessing worse than actual situations. Many investors are sitting on the edge the last 2 weeks or so.