Bumi Armada downgraded to 'neutral'

Midf Research has downgraded Bumi Armada Bhd to "neutral" with an unchanged target price of RM3.62 given the cautious
market outlook and weaker oil prices in the immediate term.

In a research note today, it said the grading is consistent with its downgrade of the market's valuation, with the year-end Kuala Lumpur Composite Index target reduced from 1,650 to 1,430.

"Fundamentally, we still like Bumi Armada's sizeable order book of RM5.8 billion and potential contract extension worth RM2.5 billion," it added.

Meanwhile, OSK Research also downgraded the company to "neutral" with an unchanged target price of RM3.65.


"Given that the share price of Bumi Armada has performed very well since its listing, despite the recent global market retracement, we are downgrading our call to neutral," it added.

Yesterday, Bumi Armada's jointly controlled entity, Forbes Bumi Armada Offshore Ltd, signed a floating production, storage and offloading (FPSO) contract with Oil and Natural Gas Corp Ltd (ONGC).

The contract is for an FPSO to be operated by Forbes on the ONGC D1 filed located 200km off the west coast of Mumbai, India. The contract is for a seven-year fixed term time charter, plus another six-year annual extension at ONGC's discretion. -- Bernama