Bumi Armada; Buy; RM4.22
Price Target: RM5.20; BAB MK

The Financial Daily (FD) reported that Ananda Krishnan and his bumiputera partners will sell c.15% (440m shares) of their stakes in Bumi Armada to local and foreign funds via private placements. The article reported that the shares would be placed out at between 3-6% discount to closing price of RM4.22. Placement will be finalised in coming days.

The rationale is as stated in the FD: "...widen shareholder base and raise a little money". Post-placement, Ananda Krishnan and his partners will still have c.55% stake in Bumi Armada, according to the article. Though the company is run by a team of experienced O&G professionals, we do not discount a knee-jerk reactions from the news. To recap, the stock was listed on 21 Jul 2011 at an IPO price of RM3.03.

Bumi Armada continues to benefit from a diversified earnings base with large exposure to the growing O&G sector in Asia and Africa. We maintain our Buy call. Despite a possible knee-jerk reaction to the news, Bumi Armada’s longer term prospects are anchored by its synergistic O&G services leveraging on geographical expansion.

Source: HwangDBS Research - 27 April 2012