https://rfs.cgsi.com/api/download?file=cd367732-567e-4325-9523-5af03a323e3a&rpt=e51fa19a-b433-4d83-a672-46cef76c7d20

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These days O&G are able to finance their projects via bond issue to funds/retails. All depends on the yield(risk v reward. Yinson is proposing to issue one. https://www.thestar.com.my/business/business-news/2024/02/09/the-lure-and-risks-of-perpetual-bonds

FOCUS OF THE DAY
BUMI ARMADA (BUY Maintained, FV: RM0.68) All set for Armada Sterling V operations

We maintain BUY call on Bumi Armada with an unchanged sum-of-parts (SOP) derived fair value (FV) of RM0.68/share which implies a CY24F P/E of 5x, below its 3-year average of 6x. Our FV also reflects a neutral ESG rating of 3 stars.

India’s Oil & Natural Gas Corporation (ONGC) announced that it finally achieved first oil from the M-field in deep-water KG-DWN-98/2 block on 7 January after experiencing a 1-year delay. This marks the commencement of oil production for FPSO Armada Sterling V, owned by the 70:30 JV between India’s Shapoorji Pallonji Energy and Bumi Armada.

We positively view the development which confirms the start of charter rate payments for FPSO Armada Sterling V in FY24F. This is in line with our expectations which incorporates contribution from JV and associates, projected to rise by 29% YoY, driven primarily by FPSO Armada Sterling V.

Bumi Armada currently trades at a compelling FY24F PE of 4x vs. the FBM KLCI's 1-year forward PE of 13x. This is unjustified given the group’s recurring and sustainable earnings stream from FPSO operations as well as an improving balance sheet.

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