Excluding one-off gains/losses, the quarterly profit should be within the range of RM200mil to RM220mil. Anything below RM180mil will be a disappointment.
Unlikely to announce new project at the AGM, because new projects have to be announced as soon as they are finalized, unless they finalize the new project today, which is quite unlikely.
Cash flows remained robust with RM288.3 million generated from operating activities in Q1 2023, which was used to further deleverage the balance sheet and reduce interest costs for the Group. The project finance loan for Armada Kraken was fully repaid in March 2023, over 3 months ahead of schedule. The future firm orderbook at the end of Q1 2023 amounted to RM11.1 billion, with additional optional extensions of up to RM9.3 billion.
The results do not yet factor in the sale of Armada Claire FPSO and the final OSV, which will only be booked in Q2 2023 results. Looks like there will be a minor gain on disposal of around RM10m to RM15m from these.
Armada's P/E ratio should be in the 6x range for now. A higher P/E ratio will only be warranted if there is future growth baked into the share price. At the moment, minimal (or maybe even zero) future growth is baked-in as the company has thus far failed miserably to secure new FPSO contracts. If we get one or two decent FPSO contracts, expect to see the share price shooting up to 10x - 15x P/E.
Yinson. Too big to fail. One project hitcup will stretch their balance sheet. Thats why you cant give high valuation for yinson. To be fair. They run all projects concurrently not progressively.
Good quarter result. FPSO business will do well in the next 3 years. Hopefully, Armada can get at least 1 of FPSO in 2023. I also hope Armada will perform well in 2023.
Looks like they're working on multiple new projects, especially on the green energy side. The CFO was teasing a lot saying Bumi Armada is "match fit" on numerous occasions.
The ONGC FPSO is ready for first oil but the delay is from ONGC and its subsea contractors. Management in discussion on the financial penalty of the delay.
The Mumbai FSRU project is still progressing but no urgency as LNG prices have skyrocketed. Alternative designs have been shared
The RM1.5bil sukuk due in September will be refinanced when the time comes - whether in MYR or USD, to be assessed in Q1 next year
The growth plan for the future will be known throughout the rest of the year heading into 2024. CEO mentioned these projects, study, discussions and awards take a long time to materialise
Resolution no. 8 today was NOT widely supported. Same as last year. 50% shareholders and 32% of shares are against 'free giveaway' of bonus shares to the CEO of BAB. I am also against it. A gift of 1.5 mln every year is excessive.
This will be the last time I share trend analysis on Bumi Armada's debt situation, as the company is out of the woods and no longer has any debt concerns.
Good set of 1Q23 results when excluding taxes 1Q23 core net profit of RM198m was 13% lower qoq mainly due to the absence of a tax writeback that was seen in 4Q22; without this item, 1Q23 core net profit would have declined only 5% qoq. This residual decline was caused by lower FPSO Kraken uptime vs. 4Q22, and lower variation order revenues for the FPSO Olombendo. Furthermore, BAB had completed its Caspian Sea subsea construction jobs in 4Q22. These factors were partly mitigated by higher engineering services revenues, as BAB performed more of such services for its associate company in India. Against 1Q22, 1Q23 core net profit was 9% higher yoy because of higher Kraken uptime. BAB ready to take on new contracts; an award may be near Looking forward into 2Q23F, BAB will complete the sale of the laid-up FPSO Armada Claire for US$20m, and also complete the sale of its final remaining OSV; we forecast exceptional disposal gains of c.RM50m. More importantly, BAB is looking forward to the project award by TotalEnergies of an FPSO earmarked for the development of the Cameia and Golfinho discoveries offshore Angola. According to a Mar 2023 report by industry newspaper Upstream, BAB had already reserved a slot with an offshore yard in Singapore, due to the tight availability of yard space, to prepare for the potential award of the Cameia FPSO job. BAB also confirmed at its analyst briefing this afternoon that it had tendered for various other FPSO jobs, although it is careful not to take more than two large jobs simultaneously in order to not overstretch its resources. After three years of stable operations by BAB’s Kraken and Olombendo FPSO assets, BAB has successfully degeared itself, with the 1Q23 net gearing at only 0.82x vs. 1Q20’s 2.95x. BAB believes, and we concur, that it is ready for growth, and ready for new project intake. Target price uplift from assumed EPCIC award, plus lower Ke We incorporate an 11 sen uplift to our SOP valuation by assuming that BAB will win the TotalEnergies’ FPSO Cameia EPCIC project at an assumed capex of US$1.5bn and 10% margin. As this is a purely EPCIC project, the risk of a rights issue is low, in our view. We also reduce our cost of equity assumption from 16% (using beta of 2) to 13% (using beta of 1.5), as the risks surrounding BAB are much lower than in previous years. If BAB wins this award, we expect its share price to re-rate. BAB is also bidding for more Caspian Sea subsea construction work this year. Downside risks include an unexpected and material decline in oil prices that may cause a pause in the pace of upstream FPSO capex spending by the oil majors and national oil companies, impacting BAB’s future growth potential.
We raise our target price from 69 sen to 87 sen for two reasons. 1. We reduce our cost of equity assumption from 16% (using beta of 2) to 13% (using beta of 1.5), as we believe the risks surrounding BAB now are much lower than in previous years due to several years of stability in the operations of FPSO Kraken and FPSO Olombendo. 2. We also incorporate an 11 sen uplift to our SOP by assuming that BAB will win one EPCIC contract at an assumed capex of US$1.5bn FPSO project at a 10% margin. BAB has been identified by industry newspaper Upstream as the most likely candidate to win TotalEnergies’ Cameia FPSO project to develop the Cameia and Golfinho discoveries offshore Angola. As this is a purely EPCIC project, the risk of a rights issue is low, in our view. Potential re-rating catalysts include continued strong results from the FPSO segment, improving activities in the oil and gas industry as a result of high oil prices, and the improved prospects for BAB to secure longer-term and more substantial work for its two Caspian Sea pipelay vessels. Also, we expect TotalEnergies to award the commercial deal for the FPSO Cameia sometime this year. Meanwhile, BAB may be bidding for additional FPSO projects. We believe that BAB will avoid a rights issue for any future FPSO project wins, as BAB may opt for JV partnerships for new FPSO projects that may make a rights issue unnecessary or rely on upfront supplier funding that can be material. Also, BAB had said it is not interested in taking on project work for more than two large FPSOs at the same time, in order to better manage resource availability.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
CHLEONG888
924 posts
Posted by CHLEONG888 > 2023-05-24 16:51 | Report Abuse
Any bad news? Why dropping so much?