BUMI ARMADA BERHAD
KLSE (MYR): ARMADA (5210)
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Last Price
0.57
Today's Change
0.00 (0.00%)
Day's Change
0.56 - 0.58
Trading Volume
14,612,700
Analysis
Price Target
A price target is an analyst's projection of a share's future price.
Average Target Price, Price Call and Upside/Downside here are derived from Price Targets in the past 6 months.
Last Price
0.57
Avg Target Price
0.71
Upside/Downside
+0.14 (24.56%)Price Call
0
SELL
5
HOLD
22
BUY
| Date | Open Price | Target Price | Upside/Downside | Price Call | Firm | View | Action |
|---|
Discussions
45 people like this. Showing 50 of 72,471 comments
Some thing to note:
USDMYR rates used to report the balance sheet items and unrealized FX losses:
30 June 2024 = RM4.7195/USD
30 Sep 2024 = RM4.1075/USD
22 Nov 2024 = RM4.4675/USD
There is a 13% depreciation just between 30 June and 30 Sep 2024. This can be seen in the lower NTA of RM0.95 (Q3 2024) vs RM1.05 (Q2 2024) as Bumi Armada's assets and liabilities are mainly denominated in USD.
This has also resulted in unrealised FX losses of RM44mil in Q3 2024. This would have also resulted in lower revenues by around 5-10% in the quarter compared to the preceding quarter, which would have directly adversely impacted the bottomline by around RM20-30mil.
Reported net profit = RM211.3mil
Adjustment:
Unrealised FX losses = RM44.0mil
Core net profit = RM211.3mil + RM44.0mil = RM255.3mil
Now if you add another RM20mil to that, you get RM275mil. This would've been Bumi Armada's best quarter on record were it not for the Ringgit blitzing against the Dollar in August and September 2024. Funnily enough, it has given up more than half of the gains since, so this will end up inflating Bumi Armada's profit in Q4 2024.
Note: I believe the unrealized FX losses are part of the "Administrative Expenses" reported on the P&L, which has increased by around RM42mil over the previous quarter.
1 week ago
I've gone through the report. Nothing exceptional or extraordinary to highlight. But there are some interesting tidbits:
1. Despite earning full charter revenue for Armada Sterling V in Q3 2024, share of results of JV and Associates have reduced from RM32mil to RM15mil. I suspect this would be also due to the sharp weakening of USD during the quarter resulting in unrealized FX losses at the JV and associates level.
2. Armada Sterling V FPSO has completed the necessary tests and successfully achieved final acceptance on 1 July 2024. The Group holds a 30% interest in associates involved in the 98/2 Project. The associates are in discussions with the charterer on outstanding claims.
1 week ago
4Q24F may deliver forex gains, vs. forex loss in 3Q24 3Q24 core net profit of RM211m fell 20% qoq, mainly due to RM44m in unrealised forex translation losses as the US$ had depreciated from RM4.72 as at 30 Jun 2024 to RM4.12 as at 30 Sep 2024. Another reason was because of the lower qoq share of associate profits, since BAB had only begun depreciating the FPSO Armada Sterling 5 from 1 Jul 2024 when it had achieved first oil; in the immediately preceding 2Q24, BAB had recognised charter receipts from the FPSO but had not yet started depreciating the asset. Still, we expect BAB to deliver on our FY24F core net profit forecast of RM1bn, as the US$ has appreciated against the ringgit this quarter, and BAB should be able to book-in forex translation gains in 4Q24F. Our reported net profit forecast for FY24F, on the other hand, has been reduced by 25%, as we pencil-in a RM250m impairment of the FPSO Kraken, with BAB already flagging the necessity for impairment over the past two quarterly results briefings. As the impairment is a non-cash accounting charge, there is no negative implication for our DCF valuation of the FPSO’s cashflows. Nevertheless, this is a near-term downside risk to the stock, as some investors may still perceive the likely 4Q24F impairment negatively. FPSO Kraken impairment in 4Q24F already flagged; no cash impact One of the key reasons why we have reduced our FY25-26F core net profit forecasts by 21-27% is because BAB decided to accelerate the depreciation of the FPSO Armada Sterling 5, such that the majority of the asset’s book value will be depreciated by the end of its 9-year firm charter period. If BAB had adopted its usual policy (which we had previously used for our modelling), it would have depreciated the asset over its 16-year charter period, which includes the 7-year option period. We note that the cashflows from the FPSO Armada Sterling 5 remain intact, hence there is no impact to our DCF valuation of the FPSO, even though the accelerated depreciation means that the FPSO will contribute a small net accounting loss to BAB in FY25F. Consequently, our core net profit forecast for FY25F is now 21% lower than our previous forecast, and in fact, a steep 67% lower than our forecast for FY24F. The yoy drop in FY25F core EPS is on account of the FPSO TGT-1 transitioning to a lower daily charter rate (DCR) since 15 Nov 2024, and the FPSO Kraken moving to its lower-DCR option period from 1 Apr 2025F. However, all this has been reflected in our SOP-based target price, and we think that BAB’s share price remains undervalued against that. The proposed merger with MISC’s offshore unit is a potential rerating catalyst, as it may unlock the valuation of BAB to better reflect what we believe to be its underlying fundamental valuation. Reiterate Add.
1 week ago
All sails set for MISC-Bumi Armada merger
https://www.thestar.com.my/business/business-news/2024/11/25/all-sails-set-for-misc-bumi-armada-merger
1 week ago
CGSI says MISC could end up with a 76% stake in
The prospective merger may involve an all-share transaction
A combined (FPSO) entity will almost equal the fleet size of Japan’s Modec Inc.
the merged entity, while Ananda’s stake may be diluted to 8.3% from 34.8%.
1 week ago
Bumi Armada Target Price Raised to MYR0.67 From MYR0.65 by Public Investment Bank >5210.KU
Dow Jones
·
2 mins ago
·
Ratings
ARMADA (5210.BMS)
0.545
0.00%
Bumi Armada Target Price Raised to MYR0.67 From MYR0.65 by Public Investment Bank >5210.KU
1 week ago
PB valuation for BAB 96sen.
our TP may possess potential upside given our valuation of RM4.0bn represent a 30.3% steep discount against its net asset of RM5.7bn or 96sen / share.
1 week ago
Next year kraken fixed rate expired on 1 April 2025 and the option rate is 75% discount to current fixed rate
1 week ago
Maybank updated report: www.mkefactsettd.maybank-ke.com/PDFS/421214. pdf
Maintain BUY with a higher TP of MYR0.71
Appreciate if others can share reports from other IBs e.g. CGS, CIMB, RHB, UOB, HLB etc.
1 week ago
SHARES of MISC Bhd have trended down, while those of Bumi Armada Bhd have risen following last week’s confirmation that the two parties have started merger talks on the former’s floating production, storage and offloading (FPSO) assets.
The market, thus, indicates that the deal could be more advantageous to Ananda Krishnan-owned Bumi Armada and less so for the national shipping giant, MISC.
One obvious aspect of the proposed merger is their difference in size – MISC is 10 times bigger than Bumi Armada in terms of market value. Thus, the positive for the latter is that the deal should enable it to leverage on MISC’S stronger balance sheet to pursue FPSO projects.
How does the deal fare for MISC, which is 51%-owned by Petroliam Nasional Bhd (PETRONAS) and counts the Employees Provident Fund and Permodalan Nasional Bhd as major shareholders?
According to the Nov 14 announcement, MISC intends to inject its offshore assets into Bumi Armada aimed at establishing a regional pure-play FPSO player.
MISC’S offshore business owns, leases, operates and maintains offshore FPSO terminals.
While the exact stake MISC will hold in Bumi Armada remains unknown, the prospective merger may involve an all-share transaction. The parties intend to maintain the listing status of the merged entity and they have nine months to conduct due diligence and sign a definitive agreement.
Apart from offshore, MISC operates three other segments – petroleum, liquefied natural gas (LNG) and heavy engineering.
Petroleum contributes the most revenue, followed by LNG, where it is one of the world’s largest owner-operators of LNG carriers.
Within its petroleum fleet, it operates very large crude carriers (VLCC), and mid-sized tankers like Suezmaxes and Aframaxes.
With decent dividend yields, and the backing of PETRONAS, the stock is a blue-chip name.
However, the exceptionally low spot rate environment for LNG carriers has been a drag on earnings.
Spot rates for LNG are expected to remain largely subdued due to low demand for Asia and the high LNG vessel supply in Europe, Kenanga Research says in a note to clients.
The brokerage, for one, thinks that at this stage the potential merger is largely neutral for MISC.
“However, the merger could be more advantageous for Bumi Armada as it would enable the company to leverage MISC’S stronger balance sheet to pursue larger FPSO projects.”
Research firm CGS International (CGSI) says it is in principle positive on the deal.
One concern is the implications of MISC possibly having to expend a lot of its cash on a mandatory general offer (MGO).
It says this may unlikely happen. Additionally, an all-share transaction will help preserve MISC’S cash balance. However, CGSI contends that the potential merger will unlock Bumi Armada’s persistent undervaluation.
“Our 79-sen target price for Bumi Armada implies a Rm4.7bil valuation (in contrast to its market cap of Rm3.2bil), while we value MISC’S offshore business at Rm15bil.”
At the time of writing, MISC’S market cap stood at Rm33.9bil.
Combining the two entities at these valuations, CGSI says MISC could end up with a 76% stake in
The prospective merger may involve an all-share transaction
A combined (FPSO) entity will almost equal the fleet size of Japan’s Modec Inc.
the merged entity, while Ananda’s stake may be diluted to 8.3% from 34.8%.
It says if the tycoon, via his private vehicle Objektif Bersatu Sdn Bhd, could publicly announce that it does not intend to accept the MGO, there is a chance that MISC may not cross the compulsory acquisition threshold of 90%.
Alternatively, it could apply for a waiver from the regulator.
Private investor Ian Yoong says MISC could undertake a dividend or distribution-in-specie of Bumi Armada’s ordinary shares to its shareholders.
This will ensure that it meets the minimum public shareholder spread of 25%. As for Bumi Armada, it could apply for a moratorium to meet the minimum public shareholder spread.
1 week ago
FPSO giant in the making?
Currently, Bumi Armada and MISC have eight and 10 operational FPSOS, respectively.
One development is MISC’S Mero-3 project delivering first oil on Oct 30 after some delay.
The group was contracted by Brazil’s state-owned Petróleo Brasileiro SA (Petrobras) to supply the very large vessel for a significant deep-water project in the Santos Basin in Brazil. It received the final acceptance from Petrobras on Nov 2, legally allowing the 22.5-year charter period to commence.
The Mero 3 project was announced in August 2020 and MISC had spent a substantial sum to build it through internally-generated funds.
One broking firm estimates that the vessel could garner a daily charter rate of US$800,000 a day, which is equivalent to the income of 12 LNG carriers or 20 petroleum tankers. If the merger materialises, Bumi Armada shareholders can enjoy its incoming earnings and cashflows.
CGSI in a Nov 15 report notes that MISC intends to monetise the Mero-3 asset since its efforts to find trade buyers have so far not been successful.
This will free up cash flow for future investments.
And with the capital-intensive FPSO industry getting more complex, there are merits to pooling capabilities.
“The business rewards are high but they come with huge capital commitment and risk. So execution is a critical factor in the FPSO business,” says one industry player.
A combined entity will almost equal the fleet size of Japan’s Modec Inc – one of the world’s biggest FPSO players – which recently opened an office in Kuala Lumpur.
The merger is a re-rating catalyst for Bumi Armada whose share price has been in the doldrums.
Yoong notes that a decade ago, Bumi Armada’s market cap stood at Rm14.6bil, while Yinson Holdings Bhd’s was Rm2.2bil. Today, Yinson’s market cap has grown to Rm8.3bil versus the former’s Rm3.2bil.
That said, Bumi Armada’s balance sheet is stronger today, having cleared some debts, divested all of its offshore support vessels and unprofitable businesses wound down.
Its 3Q24 net profit rose 19% to Rm211.3mil. Cash balance stood at Rm1.1bil.
EGMS will need to be convened at both companies, giving minority shareholders a chance to analyse and vote accordingly.
But one thing this development confirms is that Bumi Armada is a merger and acquisition target.
The merger, if it happens, could confirm speculation that the reclusive Ananda is looking to pare down his stake or exit as the 86-year tycoon has no clear successor.
1 week ago
as informed earlier, armada is wayyy undervalued last week. So its a no brainer....
1 week ago
Near term catalyst:
1. Armada Sterling II contract extension. The original nine-year firm time-charter expired on 7 March 2024. A 1-year extension has been agreed to 7 March 2025. Discussions are ongoing to extend the contract further.
Timeline: ~3 months
Impact: Minimal as Armada Sterling II is the smallest FPSO and the lowest original contract value. Nonetheless, each extension year should be worth around 0.75 sen net per share to Bumi Armada.
2. Armada Installer and Armada Constructor contract wins. They are actively bidding for contracts in the Kazakhstan sector of the Caspian sea.
Timeline: ~3 to 12 months
Impact: Moderate as the vessels are idle and incurring depreciation and lay-up expenses every day. With a contract win, the net impact per share to Bumi Armada per year of service can be significant. Estimated at around 2.0 sen net per year of contract award.
3. Madura FLNG contract award.
Timeline: ~6 to 12 months
Impact: Significant as it will be a multibillion USD development with a lengthy (8+ years) charter period.
Other projects are less clear and are more longer-term in nature.
1. Sullom Voe FSU or FSRU
2. Shell Sarawak FCSIU
3. Bluestreak FCSIU
4. Akia field development
5. Akia FPSO and/or FLNG
6. Unknown Indonesia gas project (offshore)
7. Budi has project in Indonesia (onshore)
8. Kraken long-term lease extension - currently it is on 17 annual automatic one-year firm renewal 12 months before expiry
9. Kraken tieback to Bressey gas field
10. Potential FPSO win in South East Asia. Prospective candidates include Nam Du-U Minh in Vietnam, Salam-Patawali in Malaysia, Sepat in Malaysia, Kikeh in Malaysia, Tuna in Indonesia and Kelidang in Brunei
11. Unannounced floating power barge venture
12. Unannounced floating data center venture
1 week ago
“nikicheong > Near term catalyst:
1…Other projects are less clear and are more longer-term in nature…”
Very good info, give you a like. My ex company wanted to venture into FPSO; did a study into most FPSO operators, not as detailed as this. The risk vs success is not favorable, did not take up the venture.
Most FPSO's starting point is to acquire a very large still serviceable sea going vessel to tailor for the intended O&G field. The M&A/MOU/JV of MISC and BAB could solve one of these risks; a win-win situation. Another risk is connection; again a win-win situation for both. I hope the negotiations can be a success and bring in good $ for investors, Happy Trading and TradeAtYourOwnRisk..
1 week ago
Yes
11. Unannounced floating power barge venture
12. Unannounced floating data center venture
1 week ago
I will continue to hold onto this baby even after merger. All these TPs from the IBs are peanuts compared to the potential for the merged entity to play in the major league.
1 week ago
Excerpt from the latest CGS report:
Downside risks include a potential negative market reaction to an impairment of the FPSO Kraken in the 4Q24F results announcement during Feb 2025F, which BAB had already twice flagged at its analyst briefings (this afternoon’s briefing and the briefing three months ago). In 4Q23, BAB made a RM437m impairment against the carrying value of the FPSO Kraken, as the present value of its future cashflows at that time fell below the book carrying value of the asset. This was because the depreciation rate was not sufficiently conservative as it was
calculated on a straight line basis over the 25 year charter period (8-year firm period and 17-year option period), whereas the cashflows of the asset are concentrated in the 8-year firm period with the daily charter rate of the asset to decline 70% in the 17-year option period. As the FPSO Kraken’s charter contract approaches the end of its firm period on 31 Mar 2025F, the present value of the remaining cashflows had fallen below the net book value as at 31 Dec 2023, and will again fall below the net book value as at 31 Dec 2024F, according to BAB.
--------------------
How is this not downright fraudulent? Bumi Armada's management and accountants well knew from the day the contract was awarded that the lease rates drop 70% in the option period. Shouldn't the depreciation have been done in a manner that takes this into account? E.g. weight the depreciation by the projected revenue - resulting in higher depreciation during the firm period and lower depreciation charges in the optional extension period.
To me that's just common sense. Now management claims the net book value of the vessel is lower than the NPV of the remaining cashflows - again, this is something that should've been evident from the get go.
Did management intend to artifically inflate profits due to various Kraken startup issues in the initial couple of years?
How come other FPSOs e.g. Armada Olombendo and Armada TGT do not have these issues?
1 week ago
@ nikicheong - agreed that BAB Mgt hv not been entirely truthful abt its finances and transparency, esp on its late material announcements
But hopefully, this will be the last Kraken stunt they pull
And as impairment though hits the bottom line of BAB
Let's hope that cash flow is still strong
And tgat a 5 sen div will be declared for FY2024
1 week ago
Investment banks/warrant Issuers are trying hard to suppress price increase at the moment. Wonder how they will react when big players started to gobble up the shares...
1 week ago
He had worked hard all his life.
Now he deserves a good rest.
May His Soul Rest in Eternal Peace
5 days ago
use Chatgpt :
1.When a major shareholder of a company passes away, the company will not stop working. The death of a shareholder may have legal and financial implications, but it does not automatically cause the company to cease operations. Here's a breakdown of what happens:
Ownership Transfer: The deceased shareholder's shares will typically pass to their heirs or beneficiaries, as outlined in their will or according to the laws of inheritance. The new shareholders will inherit the rights to the shares, including voting rights and a share of any dividends.
Continuity of Business: The company will continue to operate as usual. The death of a shareholder does not impact the day-to-day management of the business, unless the shareholder held a key executive role (e.g., CEO, CFO). In such cases, the company may need to appoint a successor to manage the business operations.
2) The death of a large stakeholder in a company does not automatically stop a merger, but it can have implications depending on several factors, including the shareholder's role, the structure of the merger, and the shareholder's estate plans. Here's an outline of possible scenarios:
Impact on Voting and Approval
If the deceased shareholder held significant voting power essential for approving the merger, the shares would transfer to their estate (or heirs) as per the shareholder's will or local inheritance laws.
The executor of the estate or the heirs may need to decide whether to support or oppose the merger. This could delay the process, especially if legal disputes arise over ownership or intentions regarding the shares.
(The non-binding memorandum of understanding with MISC Berhad regarding a potential merger between us and their Offshore Business Unit is an exciting development) take from Qtr.
If the plan of merger is from big shareholder and CEO, it should not be a problem. Plus, this type of merger is win win situation.
5 days ago
My respect and thank you to AK who was loyal to his investments protecting Armada even in times of trouble. He loaned money to BAB and that way ensured that the company avoided distress. Grace for minority shareholders here.
3 days ago
I believe that AK's companies are generally well run and there's no need for minority shareholders like me to constantly look over their shoulders to see if he's trying to shaft them. If AK wanted money, he'll just declare dividends and not do some shady related party deals. A corporate cheiftain in the same mould as the great Teh Hong Piow.
Rest in peace sir.
1 day ago
Gut punch: https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3505462
This was a project that Bumi Armada had tendered for.
1 day ago
It's a fairly decent contract award - around USD35mil/year during the 10-year firm period.
1 day ago
@nikicheong- May I know how you to get the information? Did Bumi Armada tendered another project?
1 day ago
big player is now collecting in hidden mode. it seems that, Armada is set to become big.
9 hours ago
Maybe it is a few dozens small players that get share from a big player of a whale ?
9 hours ago
Today I wanted to buy some shares as the price softened at the closing during 5 minute TPC phase at 16:50, and instead I pressed SELL. Well, that was silly mistake. Those things can happen to big boys too, with more price implication.
I was upset with myself, so I put a buy for tomorrow to repurchase. Hopefully at same price.
4 hours ago
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accumulated losses finally turn to retained earning 326,899mil .
Prepare yourself for a surprise dividend at any time.
1 week ago