AmInvestment Bank Equity Research 8 November 2024
🛢⛽ O&G
MISC (HOLD, TP: RM8.60), Bumi Armada (NR)
Our view on MISC-Bumi Armada tie-up

- Rumour mill heats up for MISC-Bumi Armada acquisition. Yest Upstream reported discussions are progressing towards a final deal, to be announced by end-Nov. Insiders say they are pooling FPSO assets, but others claim an acquisition is more likely. Rationale is to help the former pursue more tenders and an internal push to be more regionalised. We see 3 possibilities (a) JV co, (b) Merger, or (c) Stake-Sale of AK's shares.

- We share market's bearish sentiment over the deal. Though admittedly there are operational synergies - both are FPSO players - we do not see additional value beyond. Though BAB FPSO orderbook stands at RM23bil up to 2041, but nearly half are entering its option period over the next 5-years. The regional exposure is rather limited, with only 1 vessel in hotly contentested regions (Angola). Aside, our channel checks do not indicate any new prospects or tender submissions other than the extension of FPSO Armada TGT 1.

- A merger based-deal may problematic for post-MISC balance sheet. We are concerned if both balance sheet are combined. Though BAB has reduced its net gearing to 0.4x vs 1.3x in 2022, it has a large 6-year US$400mil (or RM1.8bil) which we think is unsecured or tied project cashflows (signing by 3Q24). Additionally, the group also has future commitments in Akia PSC which has started 3D seismic surveying.
- A stake-sale for AK's share may see MISC punished by shareholders. Our ground checks with investors sees very poor reception for this as it may appear as a bailout for AK who has been trying to exit since 2015. AK currently holds 34.58% effective stake, so not enough to trigger an MGO.

- Clear winner for BAB investors, and stay put on MISC. Investors tied up in BAB should take the opportunity to sell on +ve newsflow, as the deal is a clear win for BAB rather than MISC. We think any purchase consideration for investors to digest must be a % discount to fair value. Our est indicate this is at RM0.60 per share, or RM1.2bil for AK's shares. MISC currently has a net debt position of 0.2x, with RM7.3bil in cash balances.

TP take boleh pakai

why selldown at closing ?

koyak

hope u guys managed to grab some during cheapo sale the past 2 days including this very early morning.

what going on ?

anyone know why the selldown in past few days?

another koyak day for BAB:(

very depressed me but my colleague lagi as kena margin call

what happened today

very sad lah. holding faithfully since 0.55 last year and now also this price. look astro also dead, maxis no move (AK, pls monitor yr management, what r they doing, high salary??)

should sell & move on ?

knee jerk reaction yesterday.

sleeping shares with a sudden roar

leeabraham bullrun168 Walaoeh, what happend ?
Super damn hot man Armada today !
Now Armada was traded at @0.59 (+0.01) (+1.7 %)
Heng ah, Ong ah, Huat ah (now 0.575!, tns it, why ah no project ???)

Better cut loss and stay away from this con counter. The director involves quite alot of fraudulent cases. It might end up like Serba Dynamik. (agreed)

participants feel very exciting; if not careful will dcs.

yes, seems like insider themselves know and buy before the push

highly controlled by syndicates. this is one share that will make sleepless nights. sold at 0.62

interestingly, they was invisible hands trying to push it up back again to 0.56 at the 11th hour before closing but failed miserably. week on week unchanged, what is in store next week, down and break below 0.555?

noticed selling heavy in 10am, 3.45-4+pm, sold 0.56. look why it underperform vs perdana, carimin, icon, velesto. regreted investing in this shit

que at 0.555 but hard to get.

rohank71, agreed with you technically. a matter of time.

drop back. i buy 0.565

Tomorrow there will be many people here talking nonsense. New names....(craps asking to buy when they selling, and vice versa
those working for syndicates or pr firm, then u koyak)

beware of trappers or syndicates newly comers, they were in other forums migrated here only when stock is hot, later u buy, stock drop.