This is not too bad. Even 0.43 would mean improvement. Not sure if RHB was a friendly or foe brokerage in the past. _________________________________________________________
RHB maintains 'buy' on Bumi Armada TheStar Mon, Jan 04, 2021 09:28am - 43 minutes ago
KUALA LUMPUR: RHB Research reiterated its "buy" recommendation on Bumi Armada Bhd on improved earnings and cash flow visibility, underpinned by stable FPSO contributions masking weaker offshore marine service weakness.
It said the group's risk-reward profile looks attractive as the current 5.2x FY21 price-earnings and 0.5x FY20 prie-book value reflects an elevated 2.6 net gearing as at 3Q20.
Bumi Armada could see higher FPSO earnings in 4Q20 on higher contributions from Armada Kraken following the completion of the scheduled maintanence procedure in September.
"We expect this vessel to deliver a stable performance, and any planned and scheduled maintenance in 2021 should fall within the allowable maintenance days.
"That said, management still does not anticipate any asset write-back to be made in the near term, with regards to Armada Kraken," said RHB.
Meanwhile, it said the OMS segment is expected to face headwinds in 4Q20 due to the absence of sub-sea work orders and potentially lower OSV utilisation rates due to the monsoon season.
However, OSV contributions could improve in 2021 on higher vessel demand on drilling and related projects as Bumi Armada pushes for better spot charter rates.
"Our TP rises to MYR0.43, after narrowing the Kraken’s DCF valuation discount to 10% (from 20%) in view
of better vessel stability.
"Our new TP implies 6.4x FY21F P/E and 0.6x FY21F P/BV," it added.
RHB's base case assumpton is that Bumi Armada will refinance the borrowings due in May so no equity fund-raising would be required.
Thanks John for the oil prices. Oil prices are moving up rapidly today, so it be helpful if you can attach time to the prices you display. Thanks again
Last time crude oil USD 50-51 is on early 40 cents.Now crude oil near USD 53 its should over 45 cents.Every 1 USD is 2 cents up for Armada.So now if trade can profit.
We expect crude oil prices to average at USD55/bbl (from USD50/bbl previously) based on (i) OPEC’s commitment to stabilise oil prices at higher levels, (ii) recent Covid-19 vaccine developments, (iii) buoyant crude oil demand from China and (iv) decreasing US crude oil inventories. While the downside risks for crude oil are still apparent, we believe that the fundamentals of crude oil prices are improving. However, most O&G players in Malaysia are still predominantly dependent upon Petronas’ capex spending. We believe that Petronas would still remain frugal on its capex spending as the Malaysian government is still heavily reliant on Petronas for its dividends. Maintain NEUTRAL on the sector as we believe that earnings recovery for O&G services players is not imminent at this juncture. Our top pick for the sector is Bumi Armada (BUY; TP: RM0.65).
OPEC agrees to ease production by 500kpd. While consensus have expected OPEC+ to maintain its current level of 7.7mpbd production cuts up till the end of March, the decisiveness from OPEC+’s part on the aforesaid matter offers great reassurance with regards to its commitment to keep oil prices afloat.
Oil demand expected to be supported by China demand and lower US crude oil inventory. We believe that oil demand would be supported by better than expected economic recovery in China and declining US crude oil inventory.
Vaccine discovery is key for an oil price recovery. The successful distribution of an effective vaccine could more than offset all headwinds that are currently plaguing the O&G industry as the demand for oil could rise by almost 10mpbd. Furthermore, future production of oil is expected to remain lower than pre-Covid-19 levels due to the massive capex cuts on E&P activities from most oil majors.
Downside risks to oil prices. (i) Resurgence in Covid-19 cases globally could dampen demand for oil and (ii) soaring Libyan oil production could also pose a risk towards oil prices as Libya is exempted from OPEC+ cuts until its output stabilizes at 1.7mbpd. Libya’s oil production has already exceeded 1.2mbpd in November from below 100kbpd just 2 months ago. (iii) Easing of sanctions on Iran and Venezuela could add at least c.2mbpd of supply to the oil market in the long-run.
Upward revision in oil prices. Based on the aforementioned factors, we revise our average oil price forecast from USD50/bbl to USD55/bbl in 2021 and we introduce our 2022 oil price forecast at USD60/bbl. We believe that crude oil demand would surpass supply in 2021 and a greater equilibrium is expected after a discovery of a successful vaccine.
Forecast and changes in call/TP: We make no changes to our earnings assumption post-3QCY20 results but have revised our target prices for Velesto and MMHE by raising our P/B targets for Velesto and MMHE to 0.4x and 0.3x (from 0.35x and 0.2x previously) based on the improving sentiments on oil prices, maintaining our HOLD rating. Hence, our TP for Velesto and MMHE rises to RM0.14 and RM0.43 (from RM0.12 and RM0.30 previously). We have also downgraded our call on PCHEM from Buy to HOLD, leaving our TP and call unchanged as share prices have already increased by 34% since our upgrade on the stock.
Maintain NEUTRAL. We believe that it is not the time yet to be Overweight on the sector as we opine that Petronas will not ramp up on its capex spending despite higher oil prices due to its dividend commitments to the Malaysian government. Our top pick for the sector is Bumi Armada (BUY; TP: RM0.65). While Bumi’s share price has increased by 66% since we have upgraded the stock, we believe that there is still plenty of upside as we view that the stock is still undervalued, trading at a FY20/21 P/E of 5.5/5.4x.
Source: Hong Leong Investment Bank Research - 7 Dec 2020
A VERY STRONG HAND IS INCHARGE; FIRSY TRANSACTION THIS MORNING WAS 37, BUT SINCE THEN NO OTHER DEAL HAS BEAT IT, INSPITE OF RISINGOIL PRICE. CAN SOMEONE EXPLAIN??
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....
bluesky168
13 posts
Posted by bluesky168 > 2021-01-03 20:57 | Report Abuse
After the recession 2015-2020, New year 2021 on-wards will be the start of bull market ~
Armada tomorrow will spike up to break above 0.40 ~