https://www.upstreamonline.com/hardcopy/1705698/bid-pairing-is-last-one-standing-in-fpso-race

Bumi Armada and SPOG believed to have won the ONGC FPSO tender.
According to CIMB report, ONGC wants the award to be finalized by 1H2019.
I would expect a slew of good news from Management in the next 3 months, to push price back to above RM0.50.
Otherwise, RI at RM0.13 is meaningless.
It will be extremely difficult to obtain the necessary shareholders approval.

Also, on a macro standpoint, trade war outcome is expected to be concluded next week favourably.
DJIA has popped above 26,000 point.
Expect a strong rally next week.

http://www.bumiarmada.com/429_427_87/Web/WebPage/Luke-C-Targett/Luke-C-Targett.html

It has been 117 days since Luke Targett joined BA on 29 Oct 2018.
Past the 100 day plan period and we see zero development in debt restructuring.
Such a cozy place to work in, Bumi Armada, no KPI, fat salary and expat package.
Let's all apply to work for Bumi Armada!

Bumi Armada - Best Employer in Malaysia.
Salary guaranteed until company goes bankrupt.
Working hours from 10am until 4pm, can avoid peak hour traffic jam.
Desks, aircond and coffee provided to surf facebook and watch youtube videos for as long as you like.
Only skill needed is keep quiet about company developments and maintain 100% secrecy. Also need to be very good in being comfortable in doing nothing and sitting on your ass for hours in office.

https://bumiarmada.taleo.net/careersection/ex/jobsearch.ftl?lang=en

Lol seems like mild improvement. Got 4 new jobs hiring.
Has been 0 jobs for many many months.

No point in doing RI at this share price.
It's too dilutive and can't raise much.
It's easier to just put the FPSO assets into an SPV and sell partial stake back to Ananda Krishnan.
He has RM1billion in bullets now to pump into Armada following his Germany resort sale.
Just need shareholders approval.

Bumi Armada seems likely to win the ONGC FPSO project in JV with Shapoorji Pallonji.

In Q32018 financials (cashflow statement, page 8), they have already pumped in RM225m (US$50m) into a JV.

Potential share price catalysts are:

1) A good Q4 report - net profit without impairment
2) Debt restructuring to complete by May 2019
3) Winning Armada Claire court case, with award up to US$284m
4) Wining a short term for Caspian Sea deployment in 2019, before redeploying the vessels to LukOil in 2020
5) Successful partial sale of FPSO asset to pare down debt

If none of the above happens, share price will remain at 0.15-0.20.
If some of the above happens, share price will move towards RM0.30-0.35.
If all of the above happens, share price will be higher than RM0.50.

heima, the catalyst for BA to go up from 0.15 to 0.2+ was because CIMB released a report immediately after UOB with a 0.70 TP, making UOB look like an idiot.

Now, CIMB's turn to backtrack after a few weeks. But I guess the TP is still higher than the current price with 50% upside. so it's not as bad as UOB's complete u-turn.

Anyway, forget all these noises. Let's see how the QR goes.

I'll probably hold until June 2019 after we have more visibility of Armada Claire before deciding what to do next. Will take a break from commenting further, lol it's a waste of time trying to speculate what will happen given the management's secrecy and lackadaisical attitude.

Goodluck everyone! Hope you make lots of money!

Lol, after quarterly report, maybe he will be even more specific.

"57.733% probability of achieving debt restructuring.
65.57% of rights issue / 34.43% of business as usual no rights issue."

Haha.

You missed out HSBC at RM0.52 , Huat.

Lol for an alternative view, can go camp at The Lounge at Four Seasons.
Ralph Marshall (AK's former right hand man) always likes to drink coffee there.
He usually sits at the corner table (2 tables away from grand piano).
He probably can tell you more about Bumi Armada from a former UT employee perspective.

lol yeah, if he's just saying that there's a chance that there could be RI as a last resort, it's understandable.

But he's being so specific with 70% chance of RI at RM0.13.

Actually, if you think about Ananda Krishnan, he really wouldn't mind to undertake RI at a cheap price. He can play the role of PNB just like Sapura, and undertake to subscribe all those rights shares that other minority shareholders opt not to subscribe. and then get a waiver from SC for mandatory takeover.

That way, he could pump more money into Armada at a cheap price, increase his shareholding, and when the share price tanks to the RI level, he buys out minority shareholders and privatize the company at a cheap price.

Conclusion: Minority shareholders are always the ones being screwed. Lol.

InvestorKING - you called Jonathan this morning?

Perhaps CIMB's Raymond Yap is getting a lot of pressure from hedge funds who are shorting Armada, who is a big client of CIMB. You'll never know. The equity research business is never truly independent. It all boils down to money.

Just make your own assessment. For me, RM0.205 is still way too cheap for an FPSO giant like BA. and it is still much more likely for BA to be able to complete the debt restructuring than not.

https://www.asiaone.com/News/AsiaOne%2BNews/Malaysia/Story/A1Story20120814-365310.html

Just an interesting side piece. Poor Raymond Yap.

Notwithstanding, it's still a buy call at RM0.30 TP.

Let's see how the QR goes either tomorrow or next Friday.

Unless CIMB has some insider info that it will be a bad QR, and is just trying to find an excuse to reduce its TP so the bank doesn't look like an idiot. It is highly unusual for banks to post a report just few days before QR.

However, if we have a good QR with good core net profit, then all skies are clear, just need to wait for debt restructuring to complete.

Goodluck all.

malaysia equity research analysts, really no quality control, just send anything you like. lol. if this is in US/Europe, such analysts would already be in a shitstorm and probably get fired not long after. also has no hope to go to buyside jobs like hedge funds. Imagine one day u tell ur portfolio manager 70 cents, 3 weeks later u tell him 30 cents. the portfolio manager will just tell you to pack your bags.

and a super arbitrary 70% probability of RI, i mean, those are the ways we do coffee shop chats.

"I think there's a 70% chance today it will rain"
"I think there's a 70% chance he will be late today"

So now, CIMB tells us:

"I think there's a 70% chance there will be RI".

well at least the CIMB analyst catalysed the share price from RM0.15 to RM0.20.
I'm just quite curious how did he arrive at the RM0.13 rights issue price.
If it's really at RM0.13, i think he can go straight to jail, lol.

Whether it's a TP of RM0.70 or RM0.30, it doesn't really matter at all when we're at RM0.2.
When the share price hits RM0.30, then let's see what the flipflopping analysts say.

UOB u-turned from RM0.43 to RM0.10
Ambank from RM0.90 to RM0.30
CIMB from RM0.70 to RM0.30

When analysts all band together like a herd to cast a negative cloud, it's the strongest indication that the share price has hit a bottom.

Buy on dips, now is the best time to go in at 0.205 in anticipation of a good QR.
the CIMB report has created the perfect timing for entry.

Starbuckee - if the MISC news is true, Armada's share price will pop like crazy. However, we have heard similar rumours before in 2015.

We all need to vote a big fat NO during the AGM to:

1) Any management incentive plan, unless it is milestone based - e.g. completion of debt restructuring, winning Armada Claire court case, increasing production volume of Kraken to reduce penalties etc.

2) Reappointment of the current board of directors, especially Tunku Ali.
This person has no experience in O&G whatsoever.

I'm also quite curious about its latest "joint venture" plan.
Did anyone notice that they pumped in RM225m into a JV in Q3 2018's report?
See the cashflow statement.

Anyway, with the current management team in place, Armada's debt problem will never be solved.

These people are just too passive and useless, sitting on their fat salaries at the expense of shareholders.

The no.1 killer of Armada is not its debt. It is the useless management.

MTN is not a Trust or REIT.
It stands for Medium Term Note, typically a 5-10 years bond.

The incoming CFO has been on the job for 6 months now.
ZERO contribution so far.
Seriously dunno hiring these expensive white expats for what. Damn parasites.

Q42017 net proft was RM64m.
I predict there will be a small or no impairment, and a one-off loss on staff retrenchment cost maybe around RM30m.

So, net profit of RM30-40m.

What management should do is just repay say US$100m of the US$380m now, and reach an agreement with the banks to restructure the US$280m debt into a 7 year tenure debt.

In the event that they win Armada Claire's US$285m settlement, then they can repay the whole thing immediately.

For new projects, they can then tap on the US$1.5bn Euro MTN after solving this short term debt issue.

This management team's no.1 skill is to keep telling investors that they're still "working on it" and "need more time". Talk talk talk so much, no outcome.

Look at Sapura, already done with rights issue, already sold 50% upstream JV stake to significantly pare down debt. They did it in 6 months.

Armada? They've been on this debt restructuring shit since 2017. Such delay kings.

Yeah, don't care about impairment at all. It's just a paper loss.
What's important is the core profit, and debt restructuring.
Can't believe that the sleeping management did not make an announcement with regards to the edge's recent report.
Maxis's CEO already replaced. Next is BA's Leon Harland?
We need a more active CEO and management team. The current team is really just sitting on their ass hoping for miracle to happen.

QR has a good chance to be good.
Management needs to present a good QR for share price to go up before AGM in May.
Else, no one will approve their management incentive plan.
My prediction is that it will go up to RM0.50 before AGM.

http://www.theedgemarkets.com/article/bumi-armada-meets-cold-shoulder-debt-refinancing

Author Adam Aziz, linkedin profile:
https://my.linkedin.com/in/adamakmalaziz

Qualifications:

Graduated 2016 from Segi College Malaysia with MassComm Degree
Freelance Magazine Layout Editor for Shell Malaysia
Content Executive for iTourism Malaysia
Journalist for the Edge Malaysia

So, we have a guy with marketing/mass comm background who recently graduated 2016 from Segi College writing a bunch of finance content on Bumi Armada.

Not discriminating on personal background here, but logically thinking, what professional experience in finance does Adam Aziz have to be writing such articles?

The quality of journalists in Malaysia really need to improve. Learn from Bloomberg journalists, most of them have strong finance background and worked as a finance professional before, and hence have a deeper understanding on real life practice in finance.

It's been a while.

Seems like share price still holding strong despite some negative report on the Edge.

The problem with news reporters / editors is that they lack the real corporate finance background.

These US$380m are unsecured debts, meaning that they will be the last in line amongst creditors to receive anything if they call default. It's so common for banks to pretend like they're not going to refinance and threaten to call default, while they knew very much that no one really wants to go that route because it will take years in the bankruptcy court and huge costs for them to get anything back.

It's a no-brainer that Armada's debt will eventually get refinanced, it just doesn't make any commercial or common sense for the banks to call the debt given Armada's long term stable FPSO cashflow. Mark my words.

Now's a good time to buy on dip while there are some irrational fears spread by some news reporters who are trying to sensationalize things to increase readership.

it will ping pong around 0.2+ for a while, before moving on to 0.3+ in the next wave.
accumulate on any dips while you still have the chance.
i'm still holding since 0.15.

1 billion market cap for a 2.5 billion topline company is just too low.
0.4x Price to Sales and 0.2x Price to Book is just too cheap.

Woodside claim alone (US$284m) that will be concluded by May 2019 is equivalent to RM0.28/share cash upside.

Armada's core competency is not in FPSO, not in OSV, but in suing others, so have faith, lol.

Still way too cheap trading at 0.15 to 0.2x P/B.
The day traders and speculators are now letting go as trading consolidates.
Take this opportunity to accumulate before the next wave.

Am still holding, since 0.15, when UOB drastically revised the TP down from RM0.41 to RM0.10.

It's very volatile now at RM0.23, it could go up to RM0.25, it could go down to RM0.20, no one knows for sure.

But if you take a step back and look at the bigger picture and medium term horizon, then it's not a matter of RM0.20 or RM0.25, but whether it can go back up to RM0.40-RM0.50.

Of course, there will always be the bearish group that states that the existing EBITDA generation from FPSOs within the firm contract period is insufficient to cover the debt amount. This is true, if

1) None of Armada's many FPSOs enter into the optional period.

2) The O&G market remains exactly where it is today, for the next 7 years, with little upstream capex, hence the large list of OSVs continue to remain undeployed for the next 7 years.

So, based on the above theory, Armada's share price should be worth RM 0 today, because the cashflow generation from all the assets today is unable to cover debt amount.

It's up to investors to assess the probability of the above happening, and ascribe the corresponding value to equity.

Consolidating before next wave.

CIMB (TP RM0.70) report points out 5 re-rating catalysts for Armada:

1) Successful debt restructuring to be completed by May 2019. Probability of banks refusing to restructure and calling full repayment is close to 0, because they will get back nothing, as the debts are unsecured and Armada's assets have been ring-fenced in separate project SPVs.

2) Armada Claire court case to be concluded by May 2019, with potential award of US$284m.

3) Armada Installer and Constructor may win an award to operate in 2Q-3Q 2019. Thereafter, Lukoil will engage these 2 vessels for 2-3 years from 2020 onwards for its Filanovsky oil field, because the only vessels available in the Caspian Sea are Armada's, hence a job is guaranteed.

4) Bumi Armada has retrenched 15% of its staff to save cost. Cross referencing the Maybank report, it was estimated that cutting 10% of its staff will save around RM60m a year, hence 15% will be around RM90m. This will flow straight to Net Profit for an earnings boost.

5) Armada Kraken penalty to be reversed once production volume improves, saving potentially US$119m

UOB TP RM0.10, CIMB TP Rm0.70. Average of the 2 yields RM0.40, I believe this will be the rough TP that the market eventually equilibrates to.

At RM0.22, still a very long runway to go up. So, I'm still holding.

UOB, after giving recommendations that led to >80% loss, is trying to redeem itself by making a standout, bold sell call. well since UOB is already in deep shit in the first place, nothing to lose, right?

Lol, if the share price stands firm or goes back up after being so oversold, UOB is going to be the joke on the street with the worst calls ever.

Actually, it doesn't really matter whether you make a buy or sell call, but at least be consistent and principled and not flip flop in 2 months, calling a buy @ 41 sens in Nov 2018 and sell @ 0.10 sens in Jan 2019.

Which client is going to trust what UOB says now? Just imagine a fund manager who received UOB's report and spoke to Kong Ho Meng where he went like BUY BUY BUY @ 41 sens and then it dropped and now he goes SELL SELL SELL @ 10 sens.

Haha, just take their words with a pinch of salt i guess.

Somehow when an equity research analyst joins the panic selling group, it's the strongest signal to me that it has hit the bottom.

https://www.bfm.my/mw-kong-ho-meng-uob-bumi-armada-leading-the-charge

Listen to UOB's Kong Ho Meng's explanation on why "Bumi Armada is his top pick" earlier.

With Bumi Armada roughly trading at 0.15x P/B, market is already pricing the equity value of ALL the vessels (FPSO & OMS) at 15 cents to the dollar.

On the OMS, 70% of the unutilized fleet has been impaired to market value today, quoting UOB's Nov 2018 report:

A RM522m OMS impairment was incurred (we expected this only in 4Q18). This mainly reflects the market values of the OSV vessels that were unutilised or loss-making. Together with the RM0.7b OMS impairment in 2016, both impairments covered 70% of the OSV fleet. No further major impairment risks are expected as the remainder of the OSV fleet is profitable and chartered on long-term with no expiries expected in 2019.

A drastic downgrade on Bumi Armada from RM0.41 (Nov 2018) to RM0.10 (Jan 2019) over such a short period with no new information just highlights shortsightnedness and foolishness. It'll be quite funny if Bumi Armada trends up after this, I wonder what the next report for the analyst is gonna be like.

Gosh, no wonder equity research at banks is a dying business.

Christmas and New Year holidays are over.
Has the expat management team returned from their European holiday ski resorts yet?

Thanks for sharing the UOB sell call article.

It's quite amusing that the last part of the article quotes "Investors who followed the analyst's recommendation would have received a negative 82 percent return in the past year", lol.

Brutal macro but Armada managed to hold firm at RM0.15.

So amazed by the management who still kept quiet with zero updates on the progress of debt restructuring.

Leon Harland probably back home holidaying in Europe, maybe flew back with the entire family on business/first class paid by the company, while the company's financials continue to languish.

So damn poor and slow in execution. Did not seize the opportunity to get things done when oil price was above US$80, just wait wait wait and take their own sweet time.

Now oil price back to US$50. Lol.

My god, I think Armada's management can win the most incompetent award in the entire universe of companies listed on Bursa.

Collected somemore at 0.15.
it's a gamble, bought with pure cash, no contra or margin.
Time is on my side.
At least hold until end March 2019, Q1 2019 when debt restructuring is supposedly complete.
Next week is window dressing week.
Goodluck all.

shpok4574, no need to be sarcastic.
I'm still holding.

I’m going on holiday soon for couple weeks - so I’ll refrain from checking the price too much haha. Will just let it run naturally. Goodluck everyone, fingers crossed.

Yup took quite some hit when cut loss at 0.35+ earlier when Q3 unexpected impairment out. Usually I’m unfazed by impairment as they’re just paper losses and non cash, but from my understanding of the somewhat irrational Malaysian market people seem to care a lot. So I just bite the bullet and sold it.

Fast forward a month later, it hit 1.55 support line 3-4 times + trade war de escalation + opec supply cut. That’s my cue to re-enter.

The macro sentiment tide is changing now, hopefully we have a Santa rally. Global stock market only went down in December for 4 out of 17 years since 2000.

The market is currently pricing Armada as if it is going to bankrupt soon.
Fear and paranoia creates deep deep mispricing.
If you can see through that, even at 20 cents, 25 cents, 30 cents -these are still all wayyyy too undervalued.

That was my bet when I entered at 0.155 two days ago, and made a highest conviction call for a strong buy.