https://plsadaptive.s3.amazonaws.com/eco/files/event_content/d23-michael-duddy-bumi-armada_yxuMERdkKpw5JqdE70C5L92psvMa7Cd6tfKSWBLh.pdf?X-Amz-Content-Sha256=UNSIGNED-PAYLOAD&X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=AKIAIFDCUHI33FU3JW5A%2F20190712%2Fus-east-1%2Fs3%2Faws4_request&X-Amz-Date=20190712T060656Z&X-Amz-SignedHeaders=host&X-Amz-Expires=600&X-Amz-Signature=80bc3c6d4328799b6f4c1a2872eaab3ae08d97c2beb127148bf15daf2f40933f

Interesting read on the difficulties faced by Armada Kraken and what BA has done to resolve it.

A bit technical but the key takeaway is that Armada has done a lot to fix many complex issues.

Things seem to be improving based on recent newsflow - Armada really should provide a progress update announcement on this.

Now's the time for Armada to announce some good news - whether it's an update on Kraken improvement, progress in debt restructuring etc. to amplify the share price catalyst.

If you notice, Armada always announces their good news in the worst time possible (big drop in oil price, trade war escalation, US rate hike etc.). Good news in a bad macro scenario makes the catalyst weak. While fundamentals should ultimately dictate price, but unfortunately nowadays it's a lot about sentiments, as we are all human. Perception is reality.

So, let's hope the new management is a bit more clever this time.

At current price of 0.215, the chances of it going higher than 0.23 is much higher than the chances of it crashing below 0.20, with all various big positives announced recently.

The market has not priced in the big positives yet - because of the lack of a strong and sustainable catalyst.

And the 3 potential strong catalysts are:

1) Kraken improvement and write back
2) Winning US$284m Claire compensation
3) Partial sale of Olombendo to bring down debt + finance ONGC project capex

Other “medium level” catalyst which will gradually improve share price over time will include:

1) completion of debt restructuring for sukuk and kraken loan
2) profit growth over the next few quarters
3) improvement on OSV utilization rate


Act accordingly.

All the best.

BA's share price is probably be range bound / gonna slowly creep up closer to QR.

The next catalyst will be QR in end Aug 2019.

Expect profit growth and more solid announcements on kraken improvements and further debt restructuring.

Downside risk is extremely limited. It won't go below 20 cents with all the big positives recently.

AK can't buy further, he's already past the 33% threshold that will trigger General Offer.

A billionaire like him won't be so stupid to use nominee accounts - eventually the money flow can be traced back to him. BA is just a small portion of his wealth, not worth the risk.

If the 1b is to go to BA, then perhaps it's via Olombendo partial stake sale. Olombendo's cashflow and assets are ringfenced via an SPV structure (in layman terms, it means that Olombendo assets and cashflow are protected against general creditors that did not finance the project) which AK can buy into. Just require board/shareholder approval to be transparent due to inherent conflict.

I wonder where AK’s RM 1 billion cash from resort sale is going to go. Hopefully there will be some corp action soon.

Our self-entitled, holier-than-thou Pearlwhite is back.
Pearlwhite, till this day you’re till too embarrassed to admit you’re dead wrong for accusing me to be the “UTSB corporate finance manager”?

If you’re wrong, just have the guts to admit you’re wrong.

In other words, the worst is over, % upside >>> % downside.

5% seems to be the floor for EPF's shareholding.
If EPF decides to cease to become a substantial shareholder, usually it's for a strong reason.

Look at Sapura Energy - EPF was pissed because Sapura was making huge losses and Shahril is the 2nd most well paid CEO (to the tune of RM70-80m) in Malaysia.

For MYEG - a change in government and various corruption allegations.

As for Armada, there is no reason to cease to be a substantial shareholder now that:

1) Debt has been restructured from ST to LT
2) Kraken is improving
3) Significant OPEX cost reduction
4) Winning the huge ONGC contract
5) Profit is expected to grow next the next few quaters

The forgotten darling is finally coming back after years in the doldrums.

It’s just the start of the run. Go in early and hold for the ride. I have been advising the same for 2 weeks since it was 0.20.

I reiterate - these are the key 7 factors that will keep pushing the stock UP, UP, UP!

1) Debt restructured
2) Kraken improved
3) ONGC new contract won
4) Reversion to net profit with strong profit growth in sight
5) Strong, consistent cash flow will pare down debt overtime and create equity value
6) Trade war truce - positive macro
7) OPEC + Russia oil production cut extension to support oil price

By the time next QR comes out, it’ll probably show profit growth with better operations, and we will be closer to 30 cents.

Even at 30 cents it’s still dirt cheap.

What more at .225 today?

The momentum will be up, up, up.

Macro sentiment and fundamentals are both strong and bullish.

This is just the beginning of the ride. It’s not too late to join.

Can’t blame IK for flip flopping, being a strong proponent of BA and now antagonist. After all, everyone’s driven by self-interest - push for a strong buy call when you hold the stock, and strong sell call when you already sold hoping to re enter cheap.

How to navigate through the noise?

Look at the facts. Look at the news flow. There has been many strong positives happening to BA in the past few months but this has not been priced in. This is a fact. So act accordingly, buy before it’s too late.

Whatever manipulation, shorties bla bla, eventually they all go away when Armada’s fundamentals strengthen over time, where strong cash flow generation pares down debt and creates equity value.

2H2019 starts today.
WIth better global sentiment of trade war truce and OPEC oil production decision,

Armada will be up, up, up.

Hope you guys have entered in the past few weeks.

Ok, trade war truce, market sentiment will be bullish next week.
The upward momentum of Armada will accelerate.
Hope you guys have already moved in last week.
Let the ride begin.

Don’t wait to chase when Armada spikes 30-40% a day.
Buy now whilst it’s still dirt cheap.

The next catalyst will be the reclassification of Sukuk and Kraken's term loan to LT debt.
With this, Armada's short term liquidity issues will be fully resolved.
The company can then focus on maximizing cashflow generation:

1) Improve Kraken Performance
2) Cut OPEX
3) Sell idle OSVs at fair price to reduce debt, interest cost and maintenance expenses

Debt will be pared down over time, increasing equity value and share price.
This is a given.

Further catalyst would be Claire's courtcase win that could yield around another RM1.2bn cash, which is an instant +RM0.20/share.

Stay tuned.

EPF probably wants to maintain at least 5% to remain as a substantial shareholder.
It's now holding very close to 5%.

https://www.thestar.com.my/business/business-news/2019/06/20/paramount-corp-selling-education-business-for-rm540pt5m-cash/

BA Chairman Tunku Ali is too busy doing his personal dealings. He recently teamed up with Ganen (ex Khazanah Inv head, now TPG SEA head) to buy some education business.

We really need a board that is fully committed and focused on turning BA around!

Been consolidating for a long time.

Could be having an upward breakout soon.

At 20 cents, it's a no-brainer.

Those who are focused on the debt level today are very short-sighted.

They can only see what's on the balance sheet, but they do not see that the strong and consistent cashflow generated by Armada's FPSO operations will pare down the debt over time.

The debt has always been there for years since Armada was at 80 cents and above. No one said Armada's worth 20 cents at that time. All the banks were projecting RM1.0 and above.

Suddenly, because of the short term liquidity issue before the debt restructuring, everyone freaked out and the debt issue got blown out of proportion. Now, with the debt being restructured, the share price remained depressed. Now all the banks are projecting RM0.20 - RM0.30.

Equity research analysts are probably the job most full of bullshit and fluff in the entire finance industry.

Trump needs a trade deal with China for 2020 re-election.
All the pressure and tension bla bla now is just a farce and negotiation tactic.
When overall market sentiment improves, BA price will follow suit.

Buy more while it's still cheap now.

Remember, all the recent big positives (debt restructuring, new contract, reversion to net profit etc.) has not been priced in yet.

Trying to chase it when it suddenly spike 20-30% in a day later on will be too late and too risky.

Secure a low entry price base now with limited downside risk, and enjoy the ride peacefully.

Next QR - look for 3 things:

1) Profit growth
2) Debt reduction with cashflow generated
3) Restructuring of ST debt to LT debt

It's gonna be a gradual climb in share price as balance sheet deleverages over time - so this is a long play.

At 20 cents and 0.3x P/B - very limited downside risks.

InvestsuccessTrader - good point that EPF's holding is only around RM60m and that is inconsequential to them.

To be frank, I think it's pointless to speculate what EPF will or will not do.

Yes, EPF has trimmed its stake from around 7% to 5%, but that seems to have slowed down a bit, hovering slightly above 5% to remain as a substantial shareholder of Armada.

What is important is to have faith in the fundamentals. So far, the new CEO has done a fairly good job in improving Kraken where he went on the field personally for several days, restructuring debt, securing new FPSO award and selling 4 OSVs with no further book loss to improve cashflow.

All of the above developments have not been priced in yet as share price has remained at around RM0.2 despite all the big positives.

So, trust your guts, trust the facts, ignore the market noise and hold it through and through. Patience that is not tested is not true patience, and true patience is virtue and rewarding.

Hold through FY2019.
Next 3 QR will likely see profit growth when operations improve.
TP in 9 Months: 2x where it is today.

Buy/Hold.

The trade war is just a farce for Trump's political ambition.

Remember, Trump's No.1 goal is not to make america great again, but to stay in power and win the re-election.

To do this, he is manipulating the voter's sentiment by:

1) Strong arming China and showing the america voters that US will always dominate the world. American voters like this. They feel powerful.

2) Putting tariff on Mexico to pressure them on immigration issues - if you have been to the US you'd know that there's a deep rooted resentment amongst some americans towards mexicans due to culture and job economic clash. Trump wants to win over these people.

3) Trump wants to put a break on oil price - he's using his trade war tariffs to achieve that, spooking the world that there will be slower global demand, hence the slide in oil price. Again, voters like this, gasoline price becomes cheaper.

If you see the pattern above, you will know that the trade war is a transient issue for the purpose of 2020 elections. There will be high volatility from now till the elections, so pick your fight wisely. As usual, I always recommend buying on dips, not just on Armada but everything else.

Goodluck everyone.

Timing wise, if AK wanted to privatize, it was best done when it was between 0.15 - 0.18 a few months back, even offering 0.25 seems like a 40% premium to entice public investors to agree.

Now that BA has announced:

1) Completion of debt restructuring
2) Further reclassification from ST debt to LT debt (Sukuk and Kraken) soon
3) Kraken operational improvement
4) Winning of new large contract
5) QR turning net profit again
6) Confirmation of no cash call by new CEO

The upside potential is huge. The current mispricing is largely due to EPF dumping and general bearish market sentiment caused by US-China trade war, which some quarters believe will lead to lower global growth and demand for oil, causing oil price to decline, hence dragging down the O&G sector as a whole.

Again, these factors are transient and short term. There are only so many share EPF can dump (they are fairly useless passive investor anyway which doesn't add value to BA) and it's quite obvious that Trump needs a deal with China on trade war for 2020 elections, despite all these political posturing.

See through all these market noise, and you'll know why now's the time to enter for a good ride, especially if you have holding power.

Privatization at 0.2 - 0.22 with 0 - 10% premium is impossible to pass through.
It requires 90% shareholders approval, while UTSB only holds 35%.
Logic > rumours.

Aiya, pearlwhite, enough of your nonsense. So full of shit all the time, remember you even used to say that I’m a UTSB corporate finance manager with all your investigations and confirmations with various sources. and all the “we knew” and “we told you so” - who are we? A bunch of jokers? And you got it so wrong and till today you kept silent and pretended it didn’t happen.

So really, just dig a hole and hide there already.

Thanks.

Patience, price recovery is coming!

So, let's recap.

3 big positives have occurred for BA, but share price remained range bound at 0.195:

1) Debt restructuring
2) Winning new contract
3) QR back to black with strong net profit

EPF is selling on good news, probably trying to cash out and rebalance their portfolio.

This presents a great opportunity to accumulate, because the big 3 positives are not properly priced in.

Once EPF is done selling, and the US-China trade war overhang is removed, the mispricing will be corrected and Armada's price will move up as they gradually pare down debt.

Things are definitely looking much better now.

Unfazed by EPF's move.

It's now back to 0.19, the same price before debt restructuring and new contract win was announced. In other words, due to the dumping by EPF and shorties, the two big positives above are not priced in.

Also, the trade war escalation between US-China further worsened overall market sentiment.

Now's a great time to go in and sweep at cheap price if you have spare bullets, then hold.

Take the opportunity to buy more when EPF dumps.
EPF always have very poor timing with Armada - buy high, sell low.
Now's the time to accumulate.
It'll pop with a positive net profit QR.

Hold it for a few more months.
I have been advising the same since it was 0.15, 0.185.
It’s not time to sell yet.
When QR turns positive net profit again, it’ll be another explosive pop.

Stay calm.

Accumulate on dips.

Debt refinancing is a huge positive that’s not been properly priced in yet due to profit taking.

"Bumi Armada management has affirmed that no equity capital is required for the project, implying that it could transfer an existing FPSO — such as Armada Claire — into the JV structure “while its partner contributes modification costs"

unclelimhuat, please send the screenshot to SC Malaysia.
They will investigate.
This is serious, it's a crime.

Consumer & Investor Office
Securities Commission Malaysia
No 3 Persiaran Bukit Kiara
Bukit Kiara
50490 Kuala Lumpur

Tel: +603-6204 8999
Fax: +603-6204 8991
E-mail: aduan@seccom.com.my

https://www.upstreamonline.com/hardcopy/1736262/enquest-winning-battles-at-kraken

Kraken uptime is improving!

Bought more.

Betting on completion of US$500m debt restructuring, and reclassification of Kraken and Sukuk to LT Debt.

No more liquidity risk thereafter, focus on paring down debt with strong cash flow and deleverage over few years.

Targeting at least a 2x flip.

Oh well, it's actually good to let these rumour mongers spread all the unsubstantiated "facts" and spook the market (if they actually have such influence, lol).

Better to let the price goes back down to 0.15-1.65 (my last 2 entry) for a much sweeter entry price for further accumulation.

So, haha, good job rumour spreaders. Please do it more, we need you for the dirty work.

The key problem with Malaysian market is that speculations and rumours like these go unchecked by SC and i3 regulators. Sigh.

thanks InvestorKING, this is helpful.

Pearlwhite - what happened to your theory that banks will not lend to Armada or refinance their debt, and your prediction that they will default in 2019? Seems like you've got it all wrong.

RJ87, feel free to do so.

Nonsense by Pearlwhite again as usual.
Refinancing old debt with new debt is as common as it is for any companies, big or small.

Especially in Armada's case where all the debt is frontloaded as current debt, which is a mismatch to their underlying asset's stable cashflow over many years. Refinancing with a 5 year debt is just matching the debt repayment with underlying cashflow, which by all means is a positive move.

and you call this an ERROR.

Seriously, how stupid can you be?

Lol, I hope you guys bought yesterday during last call at 4.50pm.

Pearlwhite's nonsense is getting annoying, and very long. So i guess...

Stop posting nonsense Pearlwhite
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The Bloomberg report tallies with what the management has been saying - debt restructuring to complete by April 2019. It has to, the debt repayment deadline is May 2019. So there is probably little room for reporting error.

Lol, now CIMB will issue report saying sorry last time typo, not 80% chance RI. We meant 80% chance of completion of debt restructuring.

buy as much as you can before 4.50!