3 upcoming share price strong catalyst:

1) 3Q results - expected to be strongly profitable + RM21m gain from Perdana sale + RM18m cost savings from Perdana maintenance

2) Claire award up to US$285m, equivalent to RM0.20 / share. But if this is won, the value will be more than RM0.20/share. Why? because Armada could use these to invest in new FPSO contract capex which generates money at a good IRR given the strong FPSO market, and also pare down debt, reducing pressure to balance sheet and investor worries - so there's surplus positive effect here.

3) Kraken further improvement - we're at 80% efficiency now (up from 55%). Once this is proven sustainable, we can expect Kraken write-back. While a write-back is on paper, we can expect stronger cashflow over a long period because of higher uptime. and reduced penalty to fix things.

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3 possible downside catalyst:

1) Enquest's Thistle Platform declared unsafe, which is totally unrelated and has nothing to do with Kraken, and is one of Enquest's many platforms which likely do not have a material impact. But market is jittery about BA's recent share price strong recovery, and will react irrationally to any unrelated news. Not sure what's next. Maybe someone finds out that Enquest CEO's brother-in-law's daughter is not feeling well and post on some forum and Armada's share price will tank. Who knows, market these days.

2) US-China trade war escalation - no deal. Lower demand for oil, oil price drops, O&G sector drops. But given how things are improving now, it's not likely. If there's any escalation, it's just a farce and negotiation tactic by both sides. It will likely resolve. Both sides need a deal.

3) OMS segment utilization worsens. Maybe. However, there are news that the OSV market is turning better now with higher charter rate and utilization, especially there's a shortage in Malaysia. and Petronas planned RM50bn capex in 2019, only spent 15bn in 1H2019, will spend 35bn in 2H2019. Who benefits? O&G players of course. and Armada has plenty of OSV fleet to redeploy to Malaysia to fulfill Petronas' demand. Who will Petronas choose? Remember AK is the one who built Petronas Twin Tower and the KLCC complex with Mahathir? Easy logic?

I'm still waiting for the announcement of Armada installer and constructor contract award shared by IK last week.

Trust logic, trust judgment, trust your guts.

Relax, keep calm and continue buying on temporal dips.

The key is:

"As the incident at the Thistle platform is not related to the Kraken field and management views that the worst is over for Armada Kraken’s operational performance, we view the sell-down on Bumi Armada’s shares as overblown."

It's funny how an unrelated news tanked Armada's shares by 20%.
And then somehow the market risk propensity gets significantly reduced.
And then 2 days later realize - oh yeah, why was I afraid lololol.

It's really like my neighbour 10 streets away in the same neighbourhood got fire, then somehow the sale price of my house has to suffer 20% discount.

mmm, makes no sense at all to me.

Latest report - Ambank - TP: RM0.54

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We maintain our BUY recommendation on Bumi Armada with a higher sum-of-parts-based fair value of RM0.54/share (from an earlier RM0.42/share), translating to a low FY20F PE of 10x vs. over 20x for the sector.
Bumi Armada’s shares were sold down yesterday likely on news that independent UK-based exploration and production operator EnQuest, currently with a market cap of £296mil (RM1.6bil), has “proactively down-manned” the Thistle platform on Monday in a precautionary move after a preliminary subsea structural inspection related to a support element on a redundant subsea storage tank. Thistle lies around 201km north-east of Shetland.
EnQuest’s 115 workers were transferred from the Thistle platform to the nearby Dunlin installation and has announced that the platform will remain shut down pending the conclusion of further inspection and any necessary remedial action.
EnQuest, which produced 68,548 barrels per day in 1H2019, is expected to generate earnings of US$159mil in FY19F and US$166mil in FY20F, over 2x vs. Bumi Armada. It has interests in multiple oil fields located in the North Sea comprising West Don, Don Southwest, Broom, Heather, Thistle, Deveron, Magnus, Greater Kittiwake Area and Kraken. It also operates the onshore Sullom Voe Oil Terminal, Ninian crude oil pipeline system and Northern Leg gas pipeline.
Recall that Bumi Armada was awarded a US$1bil floating production, storage and offloading (FPSO) vessel charter in 2012 by Enquest for the Kraken field located in the East Shetland basin, 400km north-east of Aberdeen. The FPSO is a converted Suezmax tanker with a daily production capacity of 80,000 barrels and storage capacity of over 600,000 barrels.
While first oil for the Armada Kraken FPSO was achieved on 23 June 2017, the vessel has not been able to secure its full contracted charter rate given technical issues which resulted in sub-optimal production levels. Currently, management is unable to provide clarity on Armada Kraken fully achieving Enquest’s contracted production targets.
As the incident at the Thistle platform is not related to the Kraken field and management views that the worst is over for Armada Kraken’s operational performance, we view the sell-down on Bumi Armada’s shares as overblown.

It's an unsubstantiated 20% sell down based on wrong information.
Don't be afraid to act on logic and common sense. Steel your guts on any volatility.
Otherwise there's no easy money I'm afraid.

Relax, keep calm and buy on any temporal dips.

Relax, keep calm and continue buying on temporal dips.

And remember, we’re just one month away from Q3 which is expected to be profitable. This is logic not misinformation.

20% discount today is like special sale. This is your chance tomorrow morning.

Relax, keep calm and continue buying on temporal dips.

Thanks all for the Enquest clarification that it’s a different oil field than Kraken. Lol the power of knee jerk reaction and short selling based on misinformation.

I’d expect a strong rebound tomorrow once the market and public fully assess this correctly.

It’s quite obvious - short selling.
Signal was once it touches 50 cents, trigger.
Now trading at 20% discount.
Relax, keep calm and continue buying on dips.

Extreme overreaction over enquest rig one-off fire accident. Enquest dropped 2.5% Armada dropped 20%.

Just like overreaction during Saudi drone attack. Remember how oil price reacted the first day and how it was 3 days later? We’re seeing the same thing here.

Relax, keep calm and continue buying on temporal dips.

This is your chance.

Relax, keep calm and continue buying on temporal dips.

Q3 just around the corner. 3 consecutive quarters of strong net profit = continued upwards momentum.

Relax, keep calm and continue buying on temporal dips.

JP Morgan Report - interesting statistics:

1) Kraken oil is trading a premium of US$10+ / barrel to Brent due to low sulfur content for IMO 2020 compliance requirement (in short, it's a global requirement for ships to use low sulfur content oil to reduce sulphur emission starting 1 Jan 2020).

2) Kraken's 2Q2019 production efficiency is at a very healthy 80% (up from 55% in 1Q).

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Kraken sweet crude oil (low sulfur) demand likely to be higher as shipowners look to use blended sweet crude oil as fuel. As per a news report (Source: Bloomberg), shipowners could potentially look to use blended crude oil (without refining), having sulfur content less than 0.5%, as ship fuel in lieu of IMO 2020.

These grades are currently trading at a premium of $10+ above Brent (v/s ~$2.5 in 2017). The report identifies Kraken’s crude oil as a grade that fits the bill. Kraken operator EnQuest stated that a 420k ton cargo has already been sold to Euronav for the purpose of producing compliant ship fuel and they received positive market feedback about Kraken’s utility in the shipping fuel market. Do note Kraken saw gross output rise to 32,776 bopd in 1H19 (in-line with EnQuest’s 30-35 kbopd FY19 guidance) with Bumi Armada (BAB)’s Kraken FPSO 2Q production efficiency at ~80% (from 55% in 1Q) as sustained higher production rates are the key focus moving into 2020.

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I look forward to a very very healthy 3Q number together with RM21 gain from Perdana's sale + maintenance cost savings from Perdana of RM18m per quarter.

If installer and constructor contract award is true and announced we will see 50 cents.

And if Claire’s award is positive it will bring us back to 70 cents and above. And the compensation can be used for new projects capex and pare down debt. Distress risk will literally be 0 at that stage and multiple will rerate. Market cap will go back closer to 5bn at 1x P/B at least.

And oh, let’s not forget we’re 40 days away from Q3 results which is likely to be positive again. CEO has guided 2H2019 will be much better than 1H2019. I think I have pointed this out very early on before Q2 that two consecutive quarters of net profit will see institutional investors coming back in. If we get Q3 and Q4 with good and growing net profit, with a strong set of FY2019 results, Armada will be on track to regain its former glory.

InvestorKING Good news: Armada secured both subsea construction for their both Armada installer and constructor at Caspian sea
18/10/2019 7:04 AM

——
Thanks again. what’s your source?

This is a major development but I have yet to see any announcement strangely.

Relax, keep calm and continue buying at temporal dips.

Relax, keep calm and continue buying on any temporal dips.

InvestorKING Good news: Armada secured both subsea construction for their both Armada installer and constructor at Caspian sea
18/10/2019 7:04 AM

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Thanks. Source?

Relax, keep calm and continue to buy on any temporal dips.

A temporal dip can always be expected before greater heights. Keep calm and continue buying.

It’s quite obvious that someone doesn’t understand that FPSO charter rate is fixed regardless of oil price.

“FPSO will only be profitable with USD80-120 oil price” is the stupidest, most misleading comment I’ve seen in a while. How do we explain Armada and Yinson’s net profit in the past 2 quarters with oil price around USD60 then?

Well, I reiterate - relax, keep calm and continue buying on temporal dips.

@0.215, buy call. Skeptics said PN17 and high debt.

@0.255, buy call. Skeptics said PN17 and high debt.

@0.295, buy call. Skeptics said PN17 and high debt.

@0.325, buy call. Skeptics said PN17 and high debt.

@0.355, buy call. Skeptics said PN17 and high debt.

@0.410, buy call. Skeptics said...

Relax, keep calm and continue buying on temporal dips.

http://www.bursamalaysia.com/market/listed-companies/company-announcements/6308461

Great and speedy execution. US$45m shareholder's loan for 6 years executed to refinance short term bridge loan (<1 year) for Malta project. Further derisking, more short term liquidity.

For the budget, basically we are looking for reduction in corporate tax rate.
That will be an instant boost to net profits for Armada.

Oil price already >US$60 per barrel now. Encouraging.

while the share price is good today, it's not that the share price will continue going up, up, up without any dips / profit takings. But on based on the upward trend and the balance of probabilities, the chances and frequency of it going up over a large sample size (e.g. 20+ trading days over a month) is higher than it going down, simply driven by much improved fundamentals.

i have no crystal ball, ability or foresight to predict whether share price will go up 3 bids or down 2 bids in the next hour or trading day - e.g. "will close up at 38 cents or down at 36 cents today". i think maybe there are many smarter people out there who can use technical analysis to do it but that's not the game i'm playing. mine's just simple and stupid - i.e. by the time next QR is released the share price should be higher than where it is today. that's it.

but if there's no trade deal, I would expect a magical resurgence of some short sellers on this forum saying something like they've timed this perfectly and how they will be shrewdly shorting the stock with a truckload of outdated and irrelevant news such as 97 asian financial crisis, 08 credit crisis, 14 oil price crisis, 16 armada claire termination, 17 aircel-maxis corruption case (by virtue of same shareholder AK which is frankly irrelevant to BA's operations), ignoring all the 6-8 big positives that happened in the last 12 months and staying blind to further improvements/catalysts in the next 12 months.

this pattern will likely rinse and repeat over and over again.

this is why i always recommend:

Relax, keep calm, and continue buying on temporal dips

A US-China trade deal is looking more likely to de-escalate tension.

This will lead to higher oil price due to higher demand, likely to go back to above US$60/barrel once announced.

O&G stocks will benefit.

Relax, keep calm and continue buying on temporal dips.

I think it's important to realize that the fundamentals of Armada today is so much stronger than where it was 12 months ago with debt restructuring, significant cost rationalization, selling idle assets to pare down debt, kraken's improvement, winning new FPSO contract, higher utilization rate of OMS, stronger operating cashflow and shareholder's loan funding from AK signifying his commitment to the company.

Also we can expect in 2H2019:

1) at least a partial award of Claire's case up to US$285m in Q4 2019. BA's management has indicated that there's a high chance for a favorable outcome in all the quarterly/annual reports in the past. It's just a matter of timing, with $ coming in by June 2020 latest.

2) 3Q results in 45 days - we can expect an even higher net profit in 3Q. In 2Q, net profit was 78m. Assuming the same (without further improvement in Kraken), a 21m gain will be recognized for Perdana's disposal, and 18m gain will be recognized for Perdana opex cost saving (Affin report - mgmt stated that opex cost saving is 6m per month, so for 3 months it's 18m). So we could potentially see up to RM117m net profit in 3Q on a ceteris paribus basis.

3) Further improvement in Kraken, higher operating uptime = higher income

4) Stronger macro - oil price to increase seasonally in winter periods + trade war resolution

To play devil's advocate, I'm trying to put myself in the shoes of the bears / shortsellers.
The potential downside risk that I can think of and comments on the probability of it happening:

1) Kraken problems to resurface - maybe. 50-50. Who knows.

2) Kraken contract termination & thus the debt cannot be restructured to LT, therefore triggering a liquidity crunch - very low probability, client Enquest needs Kraken very badly to survive.

3) OMS contract termination for some OSV - leading to lower utilization rate. Low probability. The trend is that oil majors are increasing their capex and demand for OSV will improve (just look at Petronas looking to spend RM32bn in 2H2019). Armada has deployed 4 additional OSVs in Malaysian waters in 2Q alone.

4) Oil price tank below US$50. Low chance. OPEC+ won't allow this to happen They want oil price to be around US$60 per barrel, plus/minus 5.

5) Trade war doesn't resolve and escalate further. Maybe. Who knows. But judging from Trump's 2020 election, he needs a deal with China to boost his chances. Trump is all about holding onto power, he doesn't actually give a shit about trade war. It's all rhetorics. On this basis, I think there's a better chance than not for a trade war resolution.

After evaluating the merits and risks - my recommendation will be the one as usual:

Relax, keep calm, and continue buying on any temporal dips.

It's quite funny how some people start to quote super old news on this forum.

Well if you need some more background reading on history here's some more for your reading pleasure in private:

2008 news: Global financial crisis
https://www.theguardian.com/business/2008/dec/28/markets-credit-crunch-banking-2008

2015 news: Oil price dipped below US$50 for the first time
https://www.theguardian.com/business/2015/jan/07/oil-price-brent-crude-falls-below-50-barrel

2016 news: Armada Claire terminated
https://sg.finance.yahoo.com/news/bumi-armada-gets-notice-termination-042107057.html

and also, the surety was a 2017 news. Totally irrelevant and outdated.

Surety is very common in lawsuits and injunctions. It’s just court logistics.

For example, if a shareholder is seeking an injunction to freeze a company’s bank account suspecting fraud, the shareholder needs to provide a surety for damages in case it was decided that fraud does not exist and the operations of the business was affected and the legal costs involved by the other side.

This is quite a funny error:

Massive Increasing Demand of Hair Transplant Services Market during 2019-2026 with Key players: Swire Pacific Limited, Bumi Armada Berhad, Falcon Energy Group, Vallianz Holdings Limited., OPS Group

https://www.marketexpert24.com/2019/10/09/massive-increasing-demand-of-hair-transplant-services-market-during-2019-2026-with-key-players-swire-pacific-limited-bumi-armada-berhad-falcon-energy-group-vallianz-holdings-limited-ops-group/

Relax, keep calm, and continue buying on temporal dips.

Relax, keep calm and continue buying on temporal dips.

Relax, stay calm, and continue buying on any temporal dips.

Relax, keep calm and continue buying on any dips.

Relax, keep calm and continue to buy on dips.

Relax, stay calm and continue to buy on dips

This is a similar trading pattern when it was at around 0.250-0.255 with gradual profit taking briefly touching 0.215 and then strongly trended upwards thereafter to where we are today. One more quarter of net profit by end Nov - and ignorant brokers such as Maybank and Kenanga will be forced to upgrade the stock price lest they become the joke on the street. I remember them revising the share price down to 0.10 from a buy call previously when armada was at 0.15. Same case as CIMB that revised TP from 70+ cents to 30 cents to 10-15 cents when share price dropped earlier, saying % probability of RI happening, and now changed tune saying a strong buy call.

At the risk of sounding arrogant which is not intended, I think there are lots of evidence in the past that shows how stupid and how wrong these brokers can be. So again, analyze the facts, see the big picture that this is a turnaround case with strongly improved fundamentals, and make your judgment.

It’s funny how a company that has never defaulted any of its debt or interest payment in its entire history since inception is “then PN17” and “is a FACT”.

This is what I call a logical fallacy, opinion disguised as a fact. I suggest you check on the English dictionary on the definition of fact vs opinion prior to posting to avoid further embarrassing yourself.

Fantastic, got it at 0.315