The reality here is that Bumi Armada has 2 options:

1) Sell the Armada Perdana vessel that has been fully written down, get US$40m real cash that can be used to fund the ONGC contract.

2) Hold on to the Armada Perdana vessel, hoping that it an be redeployed (after sitting idle for 2 years) on another project, after incurring the required capex to modify the vessel to suit the new oil field, while incuring substantial maintenance opex for the idle vessel with no cashflow until (potential) redeployment.

Note that an FPSO vessel is a very complex vessel, purpose-built for a specific oil field and cannot be easily substituted or redeployed. It's not as easy as substituting a Toyota with a Honda or Mazda. FPSO Perdana has been sitting idle for years, burning cash for maintenance with no revenue and redeployment opportunity in sight.

Arguably you can say that why didn't Armada push to redeploy Perdana to the other oil field in Nigeria that CESL is planning to do. Again, there are risks involved. CESL firstly has proven to be a client with no credibility, having defaulted payments many times in the past. Does Armada still want to get in bed with CESL on another new oil field, incur substantial capex for modification of the FPSO vessel (instead of getting money back), and run the risk of being screwed by CESL again in the long term? Considering all these, I think not.

So I think the BA team made the excellence choice. Good work.

It's not a paper exercise this time round like Kraken's impairment or write-back.

It's real cash received from disposal of an asset that has been fully written down, hence there's a gain.

IK, it’s more than that.

The announcement says:

“The Group will recognise the unpaid portion of the Purchase Price as and when funds are received from CESL. The gain to be recognised in the financial statements for the financial year ending 31 December 2019 will be approximately USD5.0 million.”

The unpaid portion is US$23m gain to be recognized later. They only recognize US$5m in 2019.

Total value increase should be US$28m or around RM118m

118m/5876m shares = 2 cents per share.

That’s about 8% increase from 25.5 cents closing today.

Have a good weekend peeps. =)

I’m impressed. Instead of holding on a depreciating and fully written down asset with an almost bankrupt client, they turned it into US$40m cash.

Can do this with Claire also. Claire has been fully written down and any sale will be pure cash for Armada.

This is a big win.

This is very good. Almost a write back of US$40m gain and this is cash.

2H2019 will recognize US$5m gain (RM20m+ boost to profit), only the portion received.

Remaining portion US$23m (~RM100m) gain to be recognized after first oil in 2 years.

This is a strong boost to P&L and balance sheet with cash to reduce debt.

Macro turning positive, oil above 60 again, company improved. Buy on any dips caused by short sellers and profit takers - they are swimming against the current to try to bring the price down. This won’t last. See the big picture and follow the big current.

Cool. I hear your point, thanks for the analysis ckca.

Ok guys, let’s all just be factual, objective and refrain from personal attacks.

I look forward to learning more from everyone and reading your analysis.

Goodluck all.

I believe the share price will go up, you believe the share price will go down.

You could be right, I could be wrong.

So let’s just agree to disagree.

There’s no good or bad guy here.

Like I said, IDSS players are free to say bad things about the company, because that’s their view.

I for one won’t say IDSS guys are the “bad guys” because they say “bad things” about the company. That’s the IDSS player’s right to share their bearish views. This doesn’t make them the “bad” guy or “good” guy. These are 2 different issues altogether. So don’t confuse that.

You’re missing out the key point.

No one is saying IDSS cannot say but promoters can.

You’re free to share your views and I get that the debt of armada is high and that’s a very valid point. It’s what got them down from 85 cents to 15 cents in the first place. So there’s a certain level of risk in that and we all acknowledge that.

But the point about IDSS players being the “good guy” and kind samaritan that is altruistic and wants to help the “ikan bilis” against the evil promoters with “forked tongue”, let’s not kid ourselves.

IDSS guys only have one motive - that is to see the share price come down and profit from it.

Promoters only have one motive - that is to see the share price go up and profit from it.

Like I said, two opposing views, two opposing motives, no good or bad.

My issue is not with IDSS players sharing their bearish views, but with IDSS players like yourself branding themselves the “good guy” and promoters the “bad guy”. I’m sure you get the point now. Think about it.

What hidden motive are you talking about?

People or promoters who bought the shares, definitely believes that it’s going to go up, hence they share their views on why it’s going up. What’s so hidden about this?

IDSS players sell shares that they don’t have by borrowing it from brokers in the morning, and they believe the shares will go down, and share their views on why it’s going down, so they can cover their position end of day and make a profit.

The key point here is there’s no good or bad on both side. Just opposing views and opposing motives. You are posting here supposedly as an IDSS player not because you’re so altruistic and wants “ikan bilis” not to lose money. By calling other people “ikan bilis” in the first place is already derogatory and shows how much you really don’t care about them, so why pretend to be the “good guy”? Your motive is just to hope that the share price will go down and profit from it, simple as that, how’s that any different from the motives of “promoters” who want it to go up and profit? No one is saying that the promoters are altruistic, I hold Armada’s shares and I’ve been posting why I think it’s good since @0.215 and encouraged people to buy it, and I’m still holding it because I believe so. Of course I have vested interest because I’m in a long position, but at least I don’t pretend to be “good” and altruistic and take the high horse.

So really, no need to pretend to be “good”. We all just want to make money, and we all have our own motives.
There is no moral high ground or low ground.

Just read through the facts and fundamentals and everyone here will make their own call.

IDSS

Step 1:

Morning 9am sell 1 million shares that they don’t have @ 0.265

Step 2:

Post on i3 about Armada old news debt issues and institutional investors selling big to take profit to spread fear and hope price goes down to 0.25-0.26

Step 3:

Before market close on the same day, buy back the 1m shares at 0.26, therefore making the spread of 0.005, or RM5,000 to cover the short position.


——

Hahaha so this is what you mean by IDSS being “good” and kind, altruistic samaritan that wants to help others?

Look, if you’re making a view or stating a fact, that’s your prerogative and I usually don’t comment. It’s your right. But spreading falsehood like this, I can’t help to laugh and comment.

ckca you know why it is better to trust IDSS players tham those promoters ?

first IDSS do not hold any shares while the promoters hold shares. Lets he honest, if you are a promoter.. surely you would have bought cheaper and try to promote your shares, hoping all those newcomers will buy and make your shares go up... then you benefit from them. Right or not ? aiya.. if I were the promoters. I will do such thing...

IDSSS do not do such thing because we have no shares, we just see shares going to drop... come in and take profit and go... thats it. Simple as that. If you want you can also sell and buy back back at lower price, still have your shares at lower price. also good for you...

see the goodness of IDSS vs those promoters who just want to make money from your late entry. They already bought long ago before you, dont be fooled by them.
05/09/2019 6:03 PM

———-

I usually don’t comment on what others say. But this one really made me chuckle hahaha.

IDSS has “no shares” therefore is “good” —> I can’t stop laughing.

Hold/buy and ride the next up wave.

I called the same @0.21-0.22 before QR, I’m calling the same now. Shortsellers will NOT succeed in pressing down the price, because the company now has stronger fundamentals and has made good progress in de-risking. It’s extremely dangerous and risky for them to try to short. They may be able to artificially press down 1-2 bids, but that’s not going to hold out long. And sooner or later, they will face a short squeeze.

When you have the facts laid out, trust it and take action and have faith. Don’t waiver.

Cheers.

Keep calm and buy.

The share price improvement is not a sudden spike with no reason, it’s based on much improved fundamentals and de-risking. The price will sustain and continue going up over time.

Just remember the new CEO had stock options at around 20 cents. He has strong interest to push it back to 50 cents and above and make a killing.

Leon was fired because he brought the share price down from 85 cents to 15 cents.

What do you think will be the #1 mandate for the new CEO? Of course bring the share price back up! His no.1 KPI.

So far so good. I recall I read some report that the new CEO personally went on Kraken for a week or so to supervise the performance improvement. Quite hands on.

Sammj, actually, bunch of idiots working at EPF. I personally know quite a few EPF fund managers. They are really just looking to make a living and not very impressive l. Case in point - they shouldn’t even have sold down from 7% to 5% earlier in May 2019 when debt was restructured.

Oh well, at least they have the “foresight” to buy in right before QR ;)

i think it will gradually move to 30-35 cents before next QR, if there's 0 news.

With a few good news - claire compensation, kraken improvement, new OSV contracts, we can reach 40 and beyond.

we are really at an inflection point here.

signalmw - EPF bought 6.1m shares on 29 Aug per the announcement, QR was out 30 Aug.

EPF bought 6.1 million shares of Armada day before QR. if you recall share price spiked 9% the morning before QR released on Friday. Lol.

EPF can buy about 80m more shares to go back to 7% now things are better.

OTB buying? ;)

See the big picture, undeniably, fundamentals have significantly improved. FY2019’s full year profit at current run rate will be at least 280m or better.

Currently trading at highly depressed 5x P/E due to balance sheet risk. Once utilization ramps up, kraken improves and debt restructured to LT, we will see multiple expansion back to 8-10x P/E.

Lol, dumb dumb hold - exactly how it should be

Hope you guys managed to buy on dips yesterday.
China stimulus and fed rate cut coming, then I expect news on trade talks resuming with Chinese delegates going to Washington, with trade war expected to be resolved by 2020 before Trump election - he needs a deal.

Company wise I expect to see positive judgment on Clare compensation (US$285m)over the next few months but of course woodside petroleum will appeal that. But initial judgment from court will be more than enough as a judgment will only be overturned with new evidence.

Meanwhile, continue to deploy more OSV in Malaysia, and armada could win the kirinkoye project as one of the 3 bidders.

From how I look at it, there’s really very limited downside at this stage. The only shit that I think can happen is oil price goes back to 30 and kraken gives problems again but that’s quite unlikely. Or global macro just goes to shit with trade war exploding.

EPF is also very close to their 5% threshold so they can’t sell down this time from 7% like they did during the 0.28 cents spike when debt restructuring was announced a few months back.

Fundamentals wise, trading dynamics wise, as long as macro sentiment remains strong, Armada will only go up, up, up.

Chinese stocks strong performance boosting Asian stocks. Likely to have a strong showing today.

https://themalaysianreserve.com/2019/09/04/bumi-armadas-1h-performance-beats-estimates-further-value-seen/

The bulls (eg myself) obviously has long position in the stock and will proactively share why they think the stock is good.

The bears (short sellers, those who sold and wants to buy back) obviously wants the price to go down and profit or re enter in a cheaper position, hence proactively sharing all the debt horror stories.

Everyone is motivated by self interest, ie every man for himself.

So just relax, take the opinions here with a pinch of salt (including mine of course), read through the facts and make a call yourself.

I have entered @0.215 and have been advising in the past few weeks to buy immediately prior to QR.

@0.25 not yet time to sell. Still a lot of runway to go up.

Those who managed to buy on dip today from the overall bearish market influence, good move and good luck.

Still got 2 more reports I'm looking to read - Affin and JP Morgan .
These 2 guys + CIMB + Maybank are more solid than the rest.

I have read all 9 analyst reports.
The average TP of all 9 banks is RM0.304
Here's the summary.

BUY

JF Apex - RM0.47
MIDF - RM0.38
CIMB - RM0.36
Hong Leong - 0.34
Ambank - RM0.33

HOLD/SELL

Jefferies - RM0.24
Public - RM0.22
Kenanga - RM0.20
Maybank - RM0.20

In essence, the BUY camp takes into account stronger fundamentals - Kraken, OMS, debt restructuring.

The SELL camp is replaying the same and only thesis - debt overhang.

The facts have been laid out.

Make your call.

Goodluck.

CIMB upgrade to buy @ base TP RM0.36 as they view BA has derisked substantially.

Potential further upside of 40 cents from Armada Claire US$285m compensation and US$272m Kraken writeback, total upside TP RM0.56 assuming 50% probability.

CIMB and Maybank has been the two most bearish banks on BA last year. CIMB has turned positive on fundamentals, Maybank needs more convincing over the next few quarters.

20+10 billion orderbook contract on hand - debt can be pared down overtime with operating cash flow at current run rate.

Once Kraken fully improved and OMS utilization increases, cash flow will be even stronger.

Not the time to sell yet.

It’s still too cheap. Contra T+2 players will be forced to take profit although the bull run is not even halfway there.

Strongly accumulate.

Fundamentals have improved a lot. Don’t fail to see the big picture. It will get even better in 2H2019 with 4 key upsides:

1) Claire US$285m compensation
2) Kraken ~US$280m partial/full write back
3) Kraken debt restructure to LT
4) Net profit growth

If all the above happens, 70 cents is in hand.
26 cents now is a big steal.

And said that there’s another potential 20 cents uplift from Claire and another 20 cents from Kraken write-back.

“There is potential upside to the SOP valuation amounting to 40 sen/share.
1. If BAB wins the Armada Claire court case, its claim for US$283.5m is worth some 20 sen/share, which we have not included in our base-case SOP valuation.
2. Once BAB becomes comfortable to write back the US$272m impairment against the Kraken FPSO made in 4Q18, as we had explained above, this will be worth 20 sen/share in today’s value.
If we include just half of the total potential upside, i.e. 20 sen/share, our SOP valuation can rise to 56 sen/share.”

CIMB upgraded Armada to BUY @ TP RM0.36

I think it's different this time - the fundamentals have substantially improved - Kraken, OMS, debt restructuring etc.

The share price run up will sustain. Not the right time to take profit yet.

Time to go back to 2 billion market cap. ;)

My overall comment - Everything looks good and has progressed well. No negative news at all this quarter. Fantastic.

There are newsflow on Armada potentially bidding for Kirinskoye job (caspian sea - i assume this is armada installer?) and if that comes through, the net profit growth will be further accelerated.

There's also a big chunk of cash potentially coming from Armada Claire from the conclusion of the court case - up to US$285m, or RM0.20+ per share.

and short term borrowings refinanced to long term - especially the sukuk murabahah.

The only remaining sizeable current debt is from Armada Kraken, which is expected to be refinanced to LT by end 2019 given that the company has received final acceptance.

Commenting on the results, Mr. Gary Christenson, Executive Director and Chief
Executive Officer of Bumi Armada said, “During the second quarter, there was a
noticeable improvement in the performance of Armada Kraken FPSO, which helped
the overall FPO revenue. The other FPO assets continued to deliver stable
performances.

The OMS business saw a noticeable improvement in the OSV fleet utilisation, mainly
due to higher demand in Malaysia. The SC vessels in the Caspian Sea however,
continue to seek new contracts.

Ok this is very encouraging.

OMS utilization increased from 39% to 51%!

78 million net profit!

https://www.upstreamonline.com/hardcopy/1842156/three-fight-for-kirinskoye-job

Armada has a good chance to win this via Bumi Armada Caspian? Anyone has info?

https://www.upstreamonline.com/hardcopy/1842156/three-fight-for-kirinskoye-job

Armada has a good chance to win this via Bumi Armada Caspian? Anyone has info?

They've never issued 2Q report in September since relisting in 2011.
Are they really going to do it this time?

Most likely no impairment in 2019 - they have done it all in 2018 for Kraken and all OSVs.

If any, it will be loss on disposal of OSVs below for any sale below the already impaired book value for cash to reduce debt, which in itself is a good thing notwithstanding the paper loss. However, I note that in the last quarter they've sold 4 OSVs at market value without any loss on disposal, which gives some confidence.

If it's a very good result, I hope they announce next Tuesday to have the full week to spike up. Announcing it on Friday after market close will dampen the positive sentiment because trading only happens 4 days later on Tuesday due to public holiday on Monday.

It's very important to manage market sentiment and share price momentum.

The Kraken shit is what brought the share price from 80 cents down to 15 cents in the first place. If things are better now, announce it!

The magic number is 62m, above or below? Haha.

BA management led by the new CEO Gary Neal Christenson is exceptionally quiet still. Just like Leon Harland. Communicate more with the media and shareholders to instill confidence please! Especially on Kraken’s improvement.