BUMI ARMADA BERHAD

KLSE (MYR): ARMADA (5210)

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Last Price

0.57

Today's Change

+0.005 (0.88%)

Day's Change

0.565 - 0.57

Trading Volume

6,899,700


45 people like this.

71,895 comment(s). Last comment by 1pingpong 8 minutes ago

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

CEO Gary says that he will be travelling to Almaty, Kazakhstan to participate in talks with potential clients there. He is going on 30th June 2024. He sounded very upbeat and positive about prospects from the Caspian region for the SC vessels, and singled out Kazakhstan as a likely destination for their next contract win. In another reply to MSWG questionnaire, I believe they mentioned there is USD2bil potential SC contracts to bid for between 2024-2026.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

As I had shared before, the Mumbai Port FSRU project is officially scrapped as it is no longer economically viable given the run up in LNG prices.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

CFO Luke spoke positively about extension to 2026 for the TGT FPSO. He pointed out that Pharos Energy had stated on their press release on their website that a two well drilling program will commence in H2 2024, which augurs well for the longer-term viability of the field and the continued need for the FPSO to extract oil.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

CEO Gary highlighted that Bumi Armada is actively tendering for FPSOs on the leased model. They are not interested in EPC or BOT FPSO projects. According to him contract awards for the projects being bid will be at the end of 2024 or in 2025.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

I was just on the webinar with Navigator Gas and posed some questions on Bluestreak CO2. Sadly, the CEO sounded rather downbeat. He said that he hopes it will pick up pace. He says emitters need sufficient incentive to set-up long-term CCS solutions. He says the business case has to work - for emitters, and for the Bluestreak partners. He says more regulation and subsidies are needed to push emitters to invest in CCS and the solutions being offered by the Bluestreak JV.

So my take on this is that the Bluestreak JV is a longer-term thing, do not expect any contract awards in the near or mid future.

Which then brings me to the question, what exactly is Bumi Armada on the cusp of attaining that they're building their cash pile towards? My bet would be either the FLNG with Pertamina, CCS with Shell, or some other smaller gas/carbon project in Indonesia.

1pingpong

710 posts

Posted by 1pingpong > 1 month ago | Report Abuse

Enter now.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

Reading the analyst reports, there is more information that can be gleaned.

1. From CGS's report, the RM60mil O&M revenue adjustment recognised in Q1 2024 includes RM7mil for Q1 2024 and RM53mil for prior quarters.

This means the recurring adjusted O&M charge is around RM30mil/year or RM7mil/quarter, with further adjustments possible in line with escalations in actual O&M costs incurred. Do take note that the O&M is with a 50% subsidiary, so the net effects on Bumi Armada's profitability with be halved.

2. From CGS's report, Bumi Armada's 30% stake in the Armada Sterling V FPSO incurred a loss of RM56mil in Q4 2023, which then narrowed to RM25mil in Q1 2024.

If we conservatively estimate that this will contribute RM100mil per year to Bumi Armada once the vessels earns the full bareboat charter rate, this means that recurring quarterly profits might see a RM50mil boost (reversal from RM25mil loss to RM25mil profits per quarter) from the Armada Sterling V FPSO.

3. From MIDF's report, the Akia PSC will be progressing to the seismic testing phase by Q4 2024, with appraisal wells expected sometime in FY2025.

If this is true, it is possible for a fast-track FID by 2026 with commencement of operations in 2028. I am unsure how much this play could be worth, if someone knows how to estimate and value oil and gas reserves, would very much welcome your input.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

Some further good news from Enquest:

Kraken net production averaged 13,700 Boepd, reflecting 98% production uptime and water injection efficiency of 95% as partial offsets to natural field decline. This continued strong operational performance saw Kraken reach the milestone of 70 million barrels of oil produced during May.

Planning work is underway ahead of the planned return to drilling at Kraken during 2025, with joint venture approval granted to order select long lead equipment required to facilitate the two-well sidetrack programme.

https://www.enquest.com/media/press-releases/article/operations-update-18

MM78

598 posts

Posted by MM78 > 1 month ago | Report Abuse

@Nikicheong
The question of less paydown of debt and noticeable cash building up in the Q1 FY 2024 was posted by an active participant in the additional question session. Luke seemed pleased this was noticed and asked ; he affirmed the cash was built up intentionally instead of usually paying down the debt. Luke has also confirmed no right issue plan in near future oi another question. I sensed the management is preparing for project funding based on these answers. I failed to screenshot the Q&A session.
Thanks for answering my question on FPSO Kraken's remaining book value.

ZacYXZ

32 posts

Posted by ZacYXZ > 1 month ago | Report Abuse

thank you niki and MM78 for the additional info and some insights. much appreciated been holding BAB from 0.24 till now with some buy and sell contra gains in between. really hope this share will get to Yinson level one day!

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

Anybody have reports from UOB, HLB or Citi, would appreciate it if you could kindly share.

Posted by jacintateh > 1 month ago | Report Abuse

@Niki, this is from HL:-

Impressive start
Armada chalked up core net profit of RM239.4m in 1Q24 (-24% QoQ, +15% YoY), which we deem above our (31%) and street (31%) forecasts. Core net profit declined 24% QoQ mainly attributed to one-off net positive effect of c.RM70m on EBIT in 4Q23 relating to resolution of outstanding issues with EnQuest. However, it was partially mitigated by an additional RM60m revenue arising from operating fee escalation for Olombendo FPSO. Armada is currently working on obtaining the Final Acceptance of Sterling V FPSO, pending commissioning tests in Jun-24, which will lead to recognition of bareboat charter from 3Q24 onwards should Armada pass the relevant tests. Raise our FY24f/25f earnings by 12%/15% and introduce FY26f forecasts at RM612m. Retain BUY call with higher SOP-derived TP of RM0.78 (from RM0.75).
Results beat. Armada chalked up core net profit of RM239.4m in 1Q24 (-24% QoQ, +15% YoY), which we deem above our (31%) and street (31%) forecasts. Key deviation stemmed from higher-than-expected revenue arising from finalisation of daily operating fee escalation relating to Olombendo FPSO. Core earnings were arrived after adjusting for insurance claim (RM0.7m), reversal of trade receivables impairment (RM0.9m) and fair value gain on hedges (-RM0.2m).
QoQ. Core net profit declined 24% mainly attributed to one-off net positive effect of c.RM70m on EBIT in 4Q23 relating to resolution of outstanding issues with EnQuest. However, it was partially mitigated by additional RM60m revenue arising from operating fee escalation for Olombendo FPSO – RM53m of which was backloaded to this quarter given the successful negotiation with its customer on revising the O&M rates for the past year.
YoY. Core earnings rose 15% driven by stronger contribution from both Olombendo (aforementioned reasons above) and Kraken FPSOs (underwent remedial work on four engines in 1Q23). However, it was moderately offset by weaker contribution from JV/associates (-88%) which stemmed from start-up costs of Sterling V while awaiting the recognition of bareboat charter.
Outlook. Armada is currently working on obtaining the Final Acceptance of Sterling V FPSO, pending commissioning tests in Jun-24, which will lead to recognition of bareboat charter from 3Q24 onwards should Armada pass the relevant tests. Meanwhile, TGT FPSO is finishing its firm period in Nov-24 but management is confident of securing a lease extension as its client intends to drill more wells on the TGT Field. However, the discussion relating to the charter rates and length of extension remain fluid as the client is also seeking to extend the PSC which is due to expire in two years. Overall, we expect Armada to record double digit earnings growth in FY24f. Balance sheet wise, Armada’s net gearing marked another sequential decline to 0.56x (from 0.65x in 4Q23), allowing it to gear up for new job opportunities when it arises.
Forecast. Raise our FY24f/25f earnings by 12%/15% after imputing annual report updates and raising our margins assumption for Olombendo FPSO. Also, we introduce FY26f forecasts at RM612m.
Maintain BUY, TP of RM0.78. Post adjustments, our SOP-derived TP is revised upward to RM0.78 (from RM0.75), implying an undemanding FY24f PE multiple of 4.0x. We continue to like Armada due to (i) its undemanding valuation in anticipation of bumper earnings in FY24f due to contribution from Armada Sterling V and (ii) current tight FPSO market which gives Armada an upper hand in negotiating favourable charter rates for any new job wins that may arise.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

Thanks Jacinta!

UncleFollower

1,276 posts

Posted by UncleFollower > 1 month ago | Report Abuse

Bumi Armada (BAB MK)
1Q24: Profits In Line, Future Prospects Remain Unclear
1Q24 results are strong which we deem in line, due to: a) one-off Olombendo escalation
fee impact, b) unclear timing of payment from associate ASV (Jun 24 is the target
period for final acceptance), and c) unclear future prospects. In our view, cleaning up
the balance sheet is a noble move for shareholders, but should not take too long, and
the timing for BAB to chase for new quality contracts is long overdue. Retain HOLD.
Target price: RM0.50

https://marketing.utrade.com.sg/e3t/Ctc/L1+113/d4GP3-04/VWJ0Jv3NW5QgW6lyhZm2mSYmtVNrtzX5fLzF0N2ZRHCg3lYMRW8wLKSR6lZ3npW7vFpCk67PzYDW3Y2Jb114cndCW17vXx25W7H_3W7HphkP5XXKzLW5MZkyW7bPWL8W69nSCX6qDx0LW8bbCln612yjbW7L5-PQ2HM_QcW6m5HzT5NZrtSW7sMZBY15Yx-MW5pcgdV5nB-d_W1ZBj0-1ZVKv6W1C-H2L8j_TdGN8f61lRZ52wqW8v14rt7Z619gW4cnlwl254rRTW3ckcL63MxZDnVwwPSh8WhmtTW1VKSlJ8kX1gBW5Tln6h67MvldW3nqY9584_ZmxVJLVRY5vdbYjW53Nn3p4-bx-HW8_3Y0K1yRlzSW1s1ypC1zX7ghW6dpCLN25zpVBW4Z-Z1c1w8Jt9N88bB_s56smCdvfcP004

vespa

862 posts

Posted by vespa > 1 month ago | Report Abuse

UOB may just have hit on the head for short term investors. Reality check perhaps.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

One thing I disagree with UOB's and Kenanga's report is the treatment of the Lombendo FPSO's O&M adjustment. The RM60mil O&M adjustment is attributable to Angoil Bumi JV, which is a 50% subsidiary. So the net effect to Bumi Armada's net profit to shareholders is only half of that. So when you exclude RM53mil for previous quarters from the current net profit, it's foolish to deduct the full RM53mil - rather the deduction should be for Bumi Armada's share, i.e. RM27.5mil.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

While I disagree with the overly conservative SOTP valuation by UOB (they don't provide a detailed enough breakdown), the content itself is scathing but accurate. Management has been talking a big talk for long enough, but no follow through. So I agree with their assertion that Bumi Armada's future prospects are unclear. Although, it's puzzling they didn't factor in the likely contract extensions for TGT and Kraken.

Some interesting nuggets:

- BAB is increasingly focused on securing gas projects (capex sizes: US$0.2b-1b) vs FPSOs (mega capex: US$3b)
- With lower gearing, management guided that it can take on two new FPSO projects, or in detail at least one new large wholly-owned FPSO (US$1b capex) and 1-2 FPSOs on the JV level with Sharpoorji, without the need to incur additional equity fund raising
- Other than FPSOs, BAB is also preparing for more floating gas (FSRU/ FLNG) type of projects, or even projects related to carbon capture

vespa

862 posts

Posted by vespa > 1 month ago | Report Abuse

I doubt we are disputing the prospects but these have not changed over the year.

nikicheong

2,435 posts

Posted by nikicheong > 1 month ago | Report Abuse

Evolution of Debt Profile since March 2019:

Table: https://i.ibb.co/HKnMpqr/barm-q12024ts.png
Graph: https://i.ibb.co/2kH0Csf/barm-q12024graph.png

Posted by Robert Waters > 4 weeks ago | Report Abuse

I read a few analyst reports from IB's. Both Kenanga and UOB downgraded Armada and reduced targets.
I agree with this ratings.
As they pointed out, armada is unable to secure new projects. It has been 8 years since last big contract win.

The problem is not that the are unable to secure contracts for future.
The problem is that they have not been able to get contracts in the past.
So the damage is already baked in the cake.

As a result the company is dying a slow death.
Even with a new contract win there will be disruption to the earnings... for about 8 years.

vespa

862 posts

Posted by vespa > 4 weeks ago | Report Abuse

sobering thought

696988

15 posts

Posted by 696988 > 4 weeks ago | Report Abuse

Is quite funny to read this kind of report, what kind of future prospects must armada must have? They already mentioned their prospect (Building our energy transition pathway towards achieving net zero goal by 2050 or earlier, by focusing on carbon emission reduction and carbon injection technologies and solutions including the Bluestreak joint venture;) take from qtr. 2050 is not future then is what?

One of their prospect is (secure new projects in core regions and with our preferred partners;) take from qtr.
The most common thing, as a good company is seeking for a quality contract not a quantity contract because getting a new contract doesn't means you earn money there is a certain risk might be happen and need more capital to run for the new contract, if a company facing high debt situation they must more carefully get into new contract.

If company in high debt position is better to stable or increase their profit and try to reduce more debt, only think about new project.

Posted by Robert Waters > 4 weeks ago | Report Abuse

This is a very good point about contract discussion. Come to think about it net zero and carbon capture is the future.
Would you tell me of few new contracts that Bumi Armada secured in these growth areas ? I will do more research. Even a couple of examples would help a lot. Do they have any projects approved for bluestreak you mentioned ? I know that UK power providers were involved. What is their order value ?

696988

15 posts

Posted by 696988 > 4 weeks ago | Report Abuse

Good question, but you ask the wrong person. You should join the agm ask them to answer your question, because I'm not the one who set the prospect which is (Building our energy transition pathway towards achieving net zero goal by 2050 or earlier, by focusing on carbon emission reduction and carbon injection technologies and solutions including the Bluestreak joint venture; ) all is take from qtr.

Posted by Robert Waters > 4 weeks ago | Report Abuse

Thank you. I missed the AGM, unfortunately. If you know of any carbon capture contracts or net zero projects that they signed later on, please post. This would be a game changer.
It is good that they focus on future, but what is the result of this focus in terms of bidding awards, please add here. In the past 8 years they had no contracts whatsover. Future related, or past, or present. Exception is ASV which is a JV only. But I like it that the 'focus' on new venture. I also like that they 'look' for opportunities. Probably means that the google things on the computer occasionally.

Posted by marlboroman2 > 4 weeks ago | Report Abuse

This forum is beginning to feel like a university study group doing a thesis on BAB. Anyway, once price goes up, which it will eventually, we'll all get A+ for our assignments (money made thereafter is merely a coincidence)

Sslee

5,339 posts

Posted by Sslee > 4 weeks ago | Report Abuse

Outlook. On April 25, FPSO Kraken will transition to an extension contract as its firm charter with Enquest concludes, resulting in a lower recurring earnings base from this asset. FPSO Sterling 5 is still awaiting the final acceptance from the client, so the asset remains on a standby rate, which is lower than the full contract rate. Its RM1.5b sukuk maturing in Sep 2024 will likely to be refinanced with an USD400m facility of which the rate is yet to be determined

Anyone know after April 25 FPSO Kraken charter rate will be reduced by how much?

chonghai

480 posts

Posted by chonghai > 4 weeks ago | Report Abuse

I sold 321,000 units of Armada over past few weeks. It is now not my major holding anymore. Keep 200,000 to see how things will unfold.

chonghai

480 posts

Posted by chonghai > 4 weeks ago | Report Abuse

While I make some money, it could have been opportunity loss to me because all my other calls such as Orient, YOCB, FPI, Harbour, Homeritz are all doing well.

nikicheong

2,435 posts

Posted by nikicheong > 4 weeks ago | Report Abuse

@SSLEE the contract value reduces by 70% as per contractual terms. Everyone who has done solid research about Bumi Armada knew about this long ago.

nikicheong

2,435 posts

Posted by nikicheong > 4 weeks ago | Report Abuse

@Robert they've not won anything, we'll be one of the first to know once it's public knowledge.

Sslee

5,339 posts

Posted by Sslee > 3 weeks ago | Report Abuse

Thanks nikicheong,
I already move from Armada to Yinson.
Hopefully by 2025 Yinson with addition two FPSO in operation the profit will be growing.

nikicheong

2,435 posts

Posted by nikicheong > 3 weeks ago | Report Abuse

SSLEE Yinson's job is just properly executing its contracts. That's partially Bumi Armada's downfall - they were working simultaneously on 4 projects in 2015, and there were delays for all. Compounded by Armada Claire being terminated and the OSV oversupply situation back then. Yinson would be wise to learn and avoid a repeat of the same.

nikicheong

2,435 posts

Posted by nikicheong > 3 weeks ago | Report Abuse

"This forum is beginning to feel like a university study group doing a thesis on BAB."

HAHA. Isn't that a good thing though?

Posted by marlboroman2 > 3 weeks ago | Report Abuse

Don't get me wrong Niki, I absolutely love reading the constructive arguments and points put forth by many in here. In my view, this is still a good value company despite the slowness of it all.

Posted by Jonathan168138 > 3 weeks ago | Report Abuse

Indian changing government, any impact to Armada project with ONCG India. 🤔

https://www.aljazeera.com/news/liveblog/2024/6/4/india-election-results-live-news-modi-eyes-historic-third-term-as-pm

Posted by Jonathan168138 > 3 weeks ago | Report Abuse

Oil and Natural Gas Corporation Ltd
NSE: ONGC
OverviewCompareFinancials
238.00 INR −46.10 (16.23%)today
4 Jun, 3:30 pm GMT+5:30 • Disclaimer

Posted by Macgyver111 > 3 weeks ago | Report Abuse

Brent moving downward..usd 76/barrel.

nikicheong

2,435 posts

Posted by nikicheong > 3 weeks ago | Report Abuse

Irrelevant Jonathan

raymondroy

673 posts

Posted by raymondroy > 3 weeks ago | Report Abuse

amazing qtr financials, eps of 4.06, T4Q PER of just 3.5x, and cash generated from operations at 271m, total borrowings reduced from 5b to 4.3b over a year...... so why the low valuation? Similar is ween at WASCO and even worse at Yinson..... so whats with O&G counters nowadays? Brent teetering at 80, in my work we have forecast it to range between 80 and 86 for the year. So what will it take for market to better accept bumi? earth to bumi..... do u read :-)

Posted by Robert Waters > 3 weeks ago | Report Abuse

Good wrap up. Any new contracts worth mentioning for our favorite counter in sight ?
PS
I am an Yinson switcher. Boy it must be even more frustrating for longs there. All going well, yet the price down over a few years. Now, that is a real downer.
My guess is that reality trumps expectations.

Sslee

5,339 posts

Posted by Sslee > 3 weeks ago | Report Abuse

O&G is a dirty word and most O&G companies PE is in low single digit.
People move away from O&G to be politically right and some even think a day will come when Science can solve the world energy problem without oil.

Posted by Robert Waters > 3 weeks ago | Report Abuse

Yes Sslee. Agree. As I work in O&G I have several counters that do not well. Some on the verge of delisting.
I can assure everyone that the switch to green energy is nothing new. 40 years ago similar stories were told. I expect us to be rewarded for taking the risk.

Posted by jacintateh > 3 weeks ago | Report Abuse

very bad day

Jeffrey

195 posts

Posted by Jeffrey > 3 weeks ago | Report Abuse

Yinson has the high debts and negative cash flow problem. Market not interested because risk is very high.

Armada eating existing projects, no new project meaning no catalyst of growth.

This two abang adik got different problems but same share price performance. Overall Armada still better than Yinson in term of share price performance.

Look at Dayang, Uzma, Wasco, Velesto already broken multiple years high.

1pingpong

710 posts

Posted by 1pingpong > 3 weeks ago | Report Abuse

Morning all. Hope you all eating lobster as your breakfast. 😃

Posted by jacintateh > 3 weeks ago | Report Abuse

From Philip Capital:- Bumi Armada (BAB MK) Strong start to the year MALAYSIA | OIL AND GAS | RESULT Core net profit of RM254m (+23% YoY) above expectations Bumi Armada (BAB) recorded a higher 1Q24 revenue of RM634m (+17% YoY), driven by higher FPSO Olombendo contributions following the resolution of the daily operating fee issue with the charterer which led to an upward revision of its O&M rates. All of its FPSOs continue to operate at a high 99–100% uptime. EBITDA margin rose 9ppts YoY to 42% as a result of the stronger operating leverage. Net gearing level continues to be on a downward trend, declining by 13% QoQ to 0.56x on the back of its strong cash flow generation. Overall, 1Q24 core net profit of RM254m (+23% YoY) was above our and consensus expectations on better-than-expected FPSO Olombendo contributions from O&M rates revision. FPSO TGT-1 and Kraken stand good chance for extension FPSO Sterling V achieved first oil in Jan24 and completed its first crude oil offload in Mar24. It is currently awaiting final acceptance from its client, ONGC, with testing scheduled to commence in Jun24. FPSO TGT-1’s firm charter period is set to expire in Nov24. We see a strong likelihood of a contract extension, as the field operator, Pharos Energy, has announced plans to drill 2 additional wells in the TGT field. Moreover, discussions are ongoing for extending the PSC agreement, which is expiring in Nov26. Similarly, for FPSO Kraken, whose firm charter is set to expire in Mar25, we are confident that an extension is already in the bag as BAB has been in discussion with the charterer, EnQuest, to find solutions to reduce the vessel's greenhouse gas emissions and has begun some engineering work on the FPSO. Maintain BUY with RM0.80 target price We make no changes to our earnings forecast and reiterate our BUY rating with the DCFderived target price unchanged at RM0.80, which implies a 7x forward 2025E PE. Key risks to our BUY call include unforeseen operational delays in existing FPSOs, a delay in securing final acceptance for Sterling V, and a sharp decline in the global oil price affecting global capex spending.

TimCoke

161 posts

Posted by TimCoke > 3 weeks ago | Report Abuse

Furthermore, good news coming soon, may boost a little bit

Posted by marlboroman2 > 3 weeks ago | Report Abuse

Yinson at 1 year's price low and falling, I wonder if BAB is attempting the same feat 🤦‍♂️

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