BUMI ARMADA BERHAD
KLSE (MYR): ARMADA (5210)
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Last Price
0.55
Today's Change
+0.01 (1.85%)
Day's Change
0.535 - 0.55
Trading Volume
6,205,200
IPO Info
File Name: ARMADA- NoticeOfProspectus (65KB).pdf Download
Discussions
45 people like this. Showing 50 of 72,421 comments
To make the deal fair, either BAB PE goes up to 14x or MISC PE goes down to 4x.
6 days ago
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5 days ago
I noticed that too. According to MIDF, Armada is valued at 3.2 PER, whereas MISC is valued at 15.4 PER. I would rather wait before the merger for the market to eventually price the assets accordingly to a reasonable PER (Price to Earning Ratio). BAB investors may be getting a raw deal with very, very heavily discounted price for their assets.
Greedy Gary cannot be that unintelligent to accept it at face value.
5 days ago
Here are the exact RHB notes. Original, in PDF is on the MISC forum of i3investor. Very enlightening.
15 November 2024 Transport | Shipping: MISC
Proposed merger with BAB
With the release of its 3Q24/9M24 results, MISC said it was entering a non-binding MoU with BAB to explore a potential share-based merger of both parties’ offshore businesses. This announcement follows industry speculation on this matter and, if completed, will create a Malaysia-based, sector-focused entity that can leverage the combined talent pool, project development, engineering capabilities, and expertise of both MISC and BAB’s offshore divisions. The proposed merged entity, anticipated to remain listed on the Main Market, would be one of the leading floating production businesses globally, with the scale, resources, and financial strength to compete effectively in the capital-intensive offshore floating production market.
This proposed deal is structured as a merger of MISC’s offshore business with BAB rather
than an outright acquisition, with both parties contributing assets via a share-swap rather than cash, which will be less taxing on cash reserves, in our view. Discussions are currently at the preliminary stages, and specific stake allocations have not been decided yet, as detailed due diligence and valuation assessments will only take place in the next phase of negotiations.
More importantly, management highlighted that the deal will be structured in a way that it will not jeopardise its ability to pay consistent dividends, especially when Mero 3 is expected to deliver stable long-term cash flows upon achieving final acceptance.
MISC’s strategic rationale for the merger is to establish a pure-play, FPSO-focused business with enhanced scale and capabilities. The group would inject its offshore assets into the combined entity, including its portfolio of 13 offshore floating solutions (seven FPSOs, five FSOs, and one semi-FPS). In FY22-23, this segment contributed operating profits of MYR652-666m, bolstered by gains from Mero 3’s construction. Looking ahead, the latter’s maiden charter contributions are expected to further anchor the segment’s performance, in our view.
For BAB, we believe acquiring MISC’s offshore assets through a share swap could
strategically expand its project portfolio and operational footprint, addressing its limited
recent tender wins, which have likely been constrained by financing challenges. This merger could improve the company’s financing access, positioning it to be more active in pursuing new growth opportunities in the FPSO market.
Ultimately, the deal’s pricing will be crucial. MISC's valuation, trading at approximately 14xP/E, significantly exceeds BAB's 4x, which highlights the need for careful consideration in valuing the former’s offshore assets. In addition to the asset valuation, other factors – eg potential synergies and alignment with the long-term strategic goals of both parties – will be important.
Given the likelihood of a share-swap rather than a substantial cash deal, we believe the
prospect of a special dividend is limited.
5 days ago
Shares swap will disadvantage BAB minority shareholders. Shares of MISC will be worth 5 times more than BAB (14/3) relative to earnings.
In a nutshell, both sides contribute 7 to 8 FPSO's to the Merged Entity (ME), but MISC will get 70% of it. And they get higher share valuation based on reputation and perception.
5 days ago
Robert if the share swap is conducted on an Enterprise Value basis, then the Market Value will not be an issue. The market value will slowly catch up to the Enterprise Value prior to the share swap.
Bumi Armada's FPSOs are also mostly at the tail end of their tenures. Meanwhile, MISC has 2 gigantic floating vessels, one of which is Mero 3 which just begun the multi-decade charter recently.
If we take EV of RM4.7bil for Bumi Armada and RM10.0bil for MISC, then Bumi Armada's shareholders' stake in the merged entity will be at 32% vs 68% for MISC. In this calculation, the market value DOES NOT matter. Logically though, the closer we get to a deal, the narrower the EV and MV will be as speculators take advantage of the arbitrage opportunity. There will however always remain a gap between the EV and MV because of the risk of a deal falling through.
Also, the EV can always be revised with new developments, e.g. if Bumi Armada gets any new contracts in the next 6 - 9 months.
4 days ago
this method ananda still very hard to cash out it shares,does he want to continue it's business with such age ?
4 days ago
Amarda assets are highly in demand due to limited supply , good fit to MISC especially able to get it at ~RM$1.05 now. Ananda doesnt need cash, he needs cash generating assets to benefit his future generations lah.
4 days ago
50c to 78c gives 50% upside.
I can't ignore the healthy gain for this mergers.
Else, it will stay below 50c forever
4 days ago
In all these discussions and valuations floating around, people hardly mention the Insonesian Akia interest that Amanda is anchoring its future on and indeed it is their new direction. Are MISc going to get that for free?
4 days ago
For the moment all analysts are pencilling zero valuation for Akia stake as Bumi Armada gas yet to share any formal appraisal or the discovery. I believe they've undertaken seismic studies a couple months ago and may know more in the coming months. Obviously if there is value here, then it is management's duty to ensure it gets added to the EV and the share swap deal reflects that accordingly.
4 days ago
Keep BUY, new MYR0.73 TP from MYR0.70, 36% upside. After updating the ESG scoresheet for the energy sector stocks under our coverage, we raise our ESG score for Bumi Armada to 2.9 from 2.7 – and adjust our TP accordingly. We favour Bumi Armada for its dedication to emissions tracking, strong waste management practices, and commitment to achieving net zero by 2050. • The positives. Since the launch of its Net Zero by 2050 target last year, Bumi Armada has made substantial strides in its sustainability efforts. The company has a strong focus on monitoring and aligning GHG emissions with reporting principles, enabling a more robust understanding of its Scope 1 and 2 emissions as of 2023, following alignment with GHG protocol classifications. Additionally, the group’s recent decline in overall emissions and its effective waste management efforts stand out as notable achievements in its sustainability journey. • Areas of improvement. In its FPSO operations, Bumi Armada reported 128.7 tCO2e per thousand tonnes of production for Scope 3 emissions, a level slightly above the International Association of Oil & Gas Producers or IOGP baseline for 2022. However, we note that the group has ongoing efforts to support clients in identifying Scope 3 reduction opportunities. Regular updates on its low carbon and/or renewable energy (RE) initiatives as well as a clear set of medium-term goals would provide greater clarity and confidence in its move towards achieving net zero. Enhancing the transparency and frequency of reporting on these fronts could also strengthen its alignment with global standards and investor expectations. • ESG score update. Reflecting its recent advancements, Bumi Armada’s ESG score has been raised to 2.9 from 2.7. We are upbeat on its comprehensive emissions tracking, which includes Scope 1, 2, and 3 emissions, as well as intensity metrics. This level of detailed reporting enhances transparency and is in line with best practices, reflecting a robust commitment to achieving its net-zero target by 2050. Additionally, the group’s strong waste management practices support its broader sustainability goals.
3 days ago
CGS International in its latest update is valuing MISC offshore business unit on DCF whereas it is valuing BAB on SOP to come up with 66.7% eventualy stake in ME held by MISC. nikicheong, won't it be more fair for both parties if the same valuation method is used, namely if it is DCF or SOP then both parties should be valued on the same valuation method?
3 days ago
Bumi Armada is currently working on the following potential projects:
1. FSU/FSRU for SVT with Enquest
2. FCSIU for CSS Hub with Sarawak Shell
3. FLNG for Madura with Pertamina
4. Undisclosed offshore gas project in Indonesia
5. Budi Onshore gas project in Indonesia
So far no positive developments for any of these.
3 days ago
@Sovereign I believe the valuation basis is same. SOP valuation is derived from the DCF of each asset.
3 days ago
No wonder MISC so eager to buy armada..
MISC shall see the value in armada future project
3 days ago
Thanks nikicheong. At the end of the day Ananda will demand a premium for giving up control of BAB as they usually do. Hope we get to ride on the premium with Ananda
3 days ago
I have just had a look at BAB 2nd half 2024 financial stmts
All the accumulated losses have been wiped off
And now there is a surplus in its reserves account
And with a healthy cash balance of above RM1 billion
Hopefully with a good 3QR financial performance
Perhaps BAB can declate a small dividend
Keeping fingers crossed
3 days ago
Brent oil rebound to usd72. 8
I guess because of Ukraine war uncertainty. Russia claims WW3 to begin
3 days ago
US allows Ukraine to make long-range missile strikes into Russia
By Christian Edwards, CNN
Updated 9:41 AM EST, Mon November 18, 2024
3 days ago
Yes there is a chance, albeit a miniscule one, that a dividend may be declared.
3 days ago
It should be refer to nta $1.05 with premium for takeover normally.
If the oil price continues to rise over usd80 or usd90..., $1.05 shld be no problem
3 days ago
Technical Buy - ARMADA (5210)
PublicInvest
Publish date: Mon, 18 Nov 2024, 09:10 AM
Technical chart: ARMADA
Target Price: RM0.565, RM0.600
Last closing price: RM0.535
Potential return: 5.6%, 12.1%
Support: RM0.500
Stop Loss: RM0.480
Possible for sideways breakout. ARMADA is potentially staging a breakout from its sideways channel, with anticipation of continuous improvement in both momentum and trend in the near term. Should immediate resistance level of RM0.565 be genuinely broken with renewed buying interest, it may continue to lift price higher to subsequent resistance level of RM0.600. However, failure to hold on to support level of RM0.500 may indicate weakness in the share price and hence, a cut-loss signal.
Source: PublicInvest Research - 18 Nov 2024
3 days ago
Not looking good at Kraken. With the drilling cancelled, there is nothing to support the production plateau and the long term viability of the field may be called into question.
https://www.upstreamonline.com/rigs-and-vessels/partner-dispute-leads-to-costly-rig-cancellation/2-1-1741948
1 day ago
The company also announced that it has decided to terminate a rig contract with Dolphin Drilling at its Kraken oilfield after joint venture partners were unable to agree on a 2025 asset drilling programme. This will cost the company $14.6m but reduce 2025 planned capex by $60m.
1 day ago
I won't be surprised if the delay in drilling contributes to a further impairment in Q1 2025. I believe the Kraken FPSO was due for impairment again anyway, this might just make it worse.
17 hours ago
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the deal’s pricing will be crucial. MISC's valuation, trading at approximately 14x
P/E, significantly exceeds BAB's 4x, which highlights the need for careful consideration in valuing the former’s offshore assets.
6 days ago