To assess the potential amount of further imparment ( worst case scenario) , we need to find out how much are the assets of OMS Armada still has on their book after the impairments so far. Any one can find out from the latest report ( I tried but could not find)?
@MM78 If an asset is not impaired, it will also be depreciated anyway. Either take impairment up front, or depreciation over time. Either way still charged out.
So taking impairment now actually means in future lower depreciation, and higher profits
Armada has around 25 Offshore vessels and a couple of pipe lay / construction vessel. The brand new cost of each OSV is around USD 15 mil. Take 100 mil for 2 construction vsls. That will make around USD 700mil of MYR 2.8 Bn as new. Armad has in the last last couple of years declared impairment in excess on MYR 2 Bn. So these assets should be sitting in their books at close to scrap or zero value. I can't see how they can have any further impairments unless some kind of accounting gimmick / fraud is at play here
Thank you ageetKumar for your knowledgeable estimate of the OMS values in Armada, base on what you shared, it is logical we should not expect too much potential impairment in immediate future . Given good performance of Armada Kraken, we can expect better results in the next few quarters as long as the loan amount is continuously pared down too.
Don't forget that Armada Claire and Armada Perdana was also involved in impairment. Over USD350mil for both vessels, which comes up to around RM1.5bil.
The value of ALL their vessels (FPSO and OMS) is around RM4.8bil on the books.
Armada Claire still has receivables of USD20mil on the books, so look out for further impairment on that as well.
Also good thing for Armada is that FPSO contract awards have now been called off / delayed. Armada financials is quite bad now, lots of debt. But cash flow is good, so within next 6 to 12 months the financial footing will be stronger. By middle of next year, it will be able to bid for new FPSO contracts.
Thanks NikiCheong, so it means OSV in Arama still worth about RM 1.3 billions if base on purchase values then but after years of depreciations in addition to impairments , the book values should be less than that . So future impairment amount still would not be too big I guess . ( Gut feel as I am not accountant ) . Any good accountant here may tell us even better ?
at this bad timing where every company is lossing money, BA performs exceptionally well with high profits....history will repeat yo boost all the way till next good quarter
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Valgrovest
1,237 posts
Posted by Valgrovest > 2020-09-02 10:47 | Report Abuse
I think it can go much higher than current level....world oil prices are moving up now !