Research Houses maintain "Buy" call on Bumi Armada

Business & Markets 2013
Written by Bernama
Wednesday, 04 December 2013 11:43
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KUALA LUMPUR (Dec 4): Research houses have maintained a "buy" call on
Bumi Armada Bhd with higher sum-of-parts fair value of RM4.50 on positive
outlook for the latest contract secured by the group.
Bumi Armada has secured contracts from Lukoil-Nizhnevolzhskneft to provide
three Ice-Class vessels to provide three newbuild vessels to service Lukoil’s
offshore platforms in the Filanovsky field in the Caspian Sea for a period of 10
plus 20 years.
"We expect the Kraken floating production, storage and offloading (FPSO)
contract to be earnings accretive when the relevant details are disclosed," RHB
said in a research note today.
Another research firm, Hong Leong Investment Research, said that with an
assumption of 20 per cent net margin, the US$262 million (RM842.46 million)
contract value is expected to contribute RM17 million to the company.
"We are positive on the long-term contract award and this will further
strengthen the company's foothold in the Caspian region. The company plans
to grow its current offshore support vessel (OSV) fleet from 50 to 80 vessels in
five years," it said.
HwangDBS Vickers Research has also maintained its forecast on a target price
of RM4.50 as the research firm has assumed higher contribution from new
OSVs in financial years 2014 and 2015.
"We estimate the charter rate at US$550k (RM1.77 million)/day , suggesting a
US$1.6 billion (~RM5 billion) contract for the eight-year duration," it added.