BUMI ARMADA BERHAD
KLSE (MYR): ARMADA (5210)
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Last Price
0.56
Today's Change
+0.015 (2.75%)
Day's Change
0.54 - 0.565
Trading Volume
13,050,700
IPO Info
File Name: ARMADA-Page 196 to Page D-18 (3.3MB).pdf.pdf Download
Discussions
45 people like this. Showing 50 of 72,439 comments
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?
6 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.
6 days ago
@Sovereign I believe the valuation basis is same. SOP valuation is derived from the DCF of each asset.
6 days ago
No wonder MISC so eager to buy armada..
MISC shall see the value in armada future project
6 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
6 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
6 days ago
Brent oil rebound to usd72. 8
I guess because of Ukraine war uncertainty. Russia claims WW3 to begin
6 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
6 days ago
Yes there is a chance, albeit a miniscule one, that a dividend may be declared.
6 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
6 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
6 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
4 days 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.
4 days 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.
3 days ago
accumulated losses finally turn to retained earning 326,899mil .
Prepare yourself for a surprise dividend at any time.
2 days ago
Some thing to note:
USDMYR rates used to report the balance sheet items and unrealized FX losses:
30 June 2024 = RM4.7195/USD
30 Sep 2024 = RM4.1075/USD
22 Nov 2024 = RM4.4675/USD
There is a 13% depreciation just between 30 June and 30 Sep 2024. This can be seen in the lower NTA of RM0.95 (Q3 2024) vs RM1.05 (Q2 2024) as Bumi Armada's assets and liabilities are mainly denominated in USD.
This has also resulted in unrealised FX losses of RM44mil in Q3 2024. This would have also resulted in lower revenues by around 5-10% in the quarter compared to the preceding quarter, which would have directly adversely impacted the bottomline by around RM20-30mil.
Reported net profit = RM211.3mil
Adjustment:
Unrealised FX losses = RM44.0mil
Core net profit = RM211.3mil + RM44.0mil = RM255.3mil
Now if you add another RM20mil to that, you get RM275mil. This would've been Bumi Armada's best quarter on record were it not for the Ringgit blitzing against the Dollar in August and September 2024. Funnily enough, it has given up more than half of the gains since, so this will end up inflating Bumi Armada's profit in Q4 2024.
Note: I believe the unrealized FX losses are part of the "Administrative Expenses" reported on the P&L, which has increased by around RM42mil over the previous quarter.
2 days ago
I've gone through the report. Nothing exceptional or extraordinary to highlight. But there are some interesting tidbits:
1. Despite earning full charter revenue for Armada Sterling V in Q3 2024, share of results of JV and Associates have reduced from RM32mil to RM15mil. I suspect this would be also due to the sharp weakening of USD during the quarter resulting in unrealized FX losses at the JV and associates level.
2. Armada Sterling V FPSO has completed the necessary tests and successfully achieved final acceptance on 1 July 2024. The Group holds a 30% interest in associates involved in the 98/2 Project. The associates are in discussions with the charterer on outstanding claims.
2 days ago
4Q24F may deliver forex gains, vs. forex loss in 3Q24 3Q24 core net profit of RM211m fell 20% qoq, mainly due to RM44m in unrealised forex translation losses as the US$ had depreciated from RM4.72 as at 30 Jun 2024 to RM4.12 as at 30 Sep 2024. Another reason was because of the lower qoq share of associate profits, since BAB had only begun depreciating the FPSO Armada Sterling 5 from 1 Jul 2024 when it had achieved first oil; in the immediately preceding 2Q24, BAB had recognised charter receipts from the FPSO but had not yet started depreciating the asset. Still, we expect BAB to deliver on our FY24F core net profit forecast of RM1bn, as the US$ has appreciated against the ringgit this quarter, and BAB should be able to book-in forex translation gains in 4Q24F. Our reported net profit forecast for FY24F, on the other hand, has been reduced by 25%, as we pencil-in a RM250m impairment of the FPSO Kraken, with BAB already flagging the necessity for impairment over the past two quarterly results briefings. As the impairment is a non-cash accounting charge, there is no negative implication for our DCF valuation of the FPSO’s cashflows. Nevertheless, this is a near-term downside risk to the stock, as some investors may still perceive the likely 4Q24F impairment negatively. FPSO Kraken impairment in 4Q24F already flagged; no cash impact One of the key reasons why we have reduced our FY25-26F core net profit forecasts by 21-27% is because BAB decided to accelerate the depreciation of the FPSO Armada Sterling 5, such that the majority of the asset’s book value will be depreciated by the end of its 9-year firm charter period. If BAB had adopted its usual policy (which we had previously used for our modelling), it would have depreciated the asset over its 16-year charter period, which includes the 7-year option period. We note that the cashflows from the FPSO Armada Sterling 5 remain intact, hence there is no impact to our DCF valuation of the FPSO, even though the accelerated depreciation means that the FPSO will contribute a small net accounting loss to BAB in FY25F. Consequently, our core net profit forecast for FY25F is now 21% lower than our previous forecast, and in fact, a steep 67% lower than our forecast for FY24F. The yoy drop in FY25F core EPS is on account of the FPSO TGT-1 transitioning to a lower daily charter rate (DCR) since 15 Nov 2024, and the FPSO Kraken moving to its lower-DCR option period from 1 Apr 2025F. However, all this has been reflected in our SOP-based target price, and we think that BAB’s share price remains undervalued against that. The proposed merger with MISC’s offshore unit is a potential rerating catalyst, as it may unlock the valuation of BAB to better reflect what we believe to be its underlying fundamental valuation. Reiterate Add.
2 days ago
All sails set for MISC-Bumi Armada merger
https://www.thestar.com.my/business/business-news/2024/11/25/all-sails-set-for-misc-bumi-armada-merger
3 hours ago
CGSI says MISC could end up with a 76% stake in
The prospective merger may involve an all-share transaction
A combined (FPSO) entity will almost equal the fleet size of Japan’s Modec Inc.
the merged entity, while Ananda’s stake may be diluted to 8.3% from 34.8%.
3 hours ago
Bumi Armada Target Price Raised to MYR0.67 From MYR0.65 by Public Investment Bank >5210.KU
Dow Jones
·
2 mins ago
·
Ratings
ARMADA (5210.BMS)
0.545
0.00%
Bumi Armada Target Price Raised to MYR0.67 From MYR0.65 by Public Investment Bank >5210.KU
2 hours ago
PB valuation for BAB 96sen.
our TP may possess potential upside given our valuation of RM4.0bn represent a 30.3% steep discount against its net asset of RM5.7bn or 96sen / share.
2 hours ago
Next year kraken fixed rate expired on 1 April 2025 and the option rate is 75% discount to current fixed rate
2 hours ago
Maybank updated report: www.mkefactsettd.maybank-ke.com/PDFS/421214. pdf
Maintain BUY with a higher TP of MYR0.71
Appreciate if others can share reports from other IBs e.g. CGS, CIMB, RHB, UOB, HLB etc.
2 hours ago
SHARES of MISC Bhd have trended down, while those of Bumi Armada Bhd have risen following last week’s confirmation that the two parties have started merger talks on the former’s floating production, storage and offloading (FPSO) assets.
The market, thus, indicates that the deal could be more advantageous to Ananda Krishnan-owned Bumi Armada and less so for the national shipping giant, MISC.
One obvious aspect of the proposed merger is their difference in size – MISC is 10 times bigger than Bumi Armada in terms of market value. Thus, the positive for the latter is that the deal should enable it to leverage on MISC’S stronger balance sheet to pursue FPSO projects.
How does the deal fare for MISC, which is 51%-owned by Petroliam Nasional Bhd (PETRONAS) and counts the Employees Provident Fund and Permodalan Nasional Bhd as major shareholders?
According to the Nov 14 announcement, MISC intends to inject its offshore assets into Bumi Armada aimed at establishing a regional pure-play FPSO player.
MISC’S offshore business owns, leases, operates and maintains offshore FPSO terminals.
While the exact stake MISC will hold in Bumi Armada remains unknown, the prospective merger may involve an all-share transaction. The parties intend to maintain the listing status of the merged entity and they have nine months to conduct due diligence and sign a definitive agreement.
Apart from offshore, MISC operates three other segments – petroleum, liquefied natural gas (LNG) and heavy engineering.
Petroleum contributes the most revenue, followed by LNG, where it is one of the world’s largest owner-operators of LNG carriers.
Within its petroleum fleet, it operates very large crude carriers (VLCC), and mid-sized tankers like Suezmaxes and Aframaxes.
With decent dividend yields, and the backing of PETRONAS, the stock is a blue-chip name.
However, the exceptionally low spot rate environment for LNG carriers has been a drag on earnings.
Spot rates for LNG are expected to remain largely subdued due to low demand for Asia and the high LNG vessel supply in Europe, Kenanga Research says in a note to clients.
The brokerage, for one, thinks that at this stage the potential merger is largely neutral for MISC.
“However, the merger could be more advantageous for Bumi Armada as it would enable the company to leverage MISC’S stronger balance sheet to pursue larger FPSO projects.”
Research firm CGS International (CGSI) says it is in principle positive on the deal.
One concern is the implications of MISC possibly having to expend a lot of its cash on a mandatory general offer (MGO).
It says this may unlikely happen. Additionally, an all-share transaction will help preserve MISC’S cash balance. However, CGSI contends that the potential merger will unlock Bumi Armada’s persistent undervaluation.
“Our 79-sen target price for Bumi Armada implies a Rm4.7bil valuation (in contrast to its market cap of Rm3.2bil), while we value MISC’S offshore business at Rm15bil.”
At the time of writing, MISC’S market cap stood at Rm33.9bil.
Combining the two entities at these valuations, CGSI says MISC could end up with a 76% stake in
The prospective merger may involve an all-share transaction
A combined (FPSO) entity will almost equal the fleet size of Japan’s Modec Inc.
the merged entity, while Ananda’s stake may be diluted to 8.3% from 34.8%.
It says if the tycoon, via his private vehicle Objektif Bersatu Sdn Bhd, could publicly announce that it does not intend to accept the MGO, there is a chance that MISC may not cross the compulsory acquisition threshold of 90%.
Alternatively, it could apply for a waiver from the regulator.
Private investor Ian Yoong says MISC could undertake a dividend or distribution-in-specie of Bumi Armada’s ordinary shares to its shareholders.
This will ensure that it meets the minimum public shareholder spread of 25%. As for Bumi Armada, it could apply for a moratorium to meet the minimum public shareholder spread.
2 hours ago
FPSO giant in the making?
Currently, Bumi Armada and MISC have eight and 10 operational FPSOS, respectively.
One development is MISC’S Mero-3 project delivering first oil on Oct 30 after some delay.
The group was contracted by Brazil’s state-owned Petróleo Brasileiro SA (Petrobras) to supply the very large vessel for a significant deep-water project in the Santos Basin in Brazil. It received the final acceptance from Petrobras on Nov 2, legally allowing the 22.5-year charter period to commence.
The Mero 3 project was announced in August 2020 and MISC had spent a substantial sum to build it through internally-generated funds.
One broking firm estimates that the vessel could garner a daily charter rate of US$800,000 a day, which is equivalent to the income of 12 LNG carriers or 20 petroleum tankers. If the merger materialises, Bumi Armada shareholders can enjoy its incoming earnings and cashflows.
CGSI in a Nov 15 report notes that MISC intends to monetise the Mero-3 asset since its efforts to find trade buyers have so far not been successful.
This will free up cash flow for future investments.
And with the capital-intensive FPSO industry getting more complex, there are merits to pooling capabilities.
“The business rewards are high but they come with huge capital commitment and risk. So execution is a critical factor in the FPSO business,” says one industry player.
A combined entity will almost equal the fleet size of Japan’s Modec Inc – one of the world’s biggest FPSO players – which recently opened an office in Kuala Lumpur.
The merger is a re-rating catalyst for Bumi Armada whose share price has been in the doldrums.
Yoong notes that a decade ago, Bumi Armada’s market cap stood at Rm14.6bil, while Yinson Holdings Bhd’s was Rm2.2bil. Today, Yinson’s market cap has grown to Rm8.3bil versus the former’s Rm3.2bil.
That said, Bumi Armada’s balance sheet is stronger today, having cleared some debts, divested all of its offshore support vessels and unprofitable businesses wound down.
Its 3Q24 net profit rose 19% to Rm211.3mil. Cash balance stood at Rm1.1bil.
EGMS will need to be convened at both companies, giving minority shareholders a chance to analyse and vote accordingly.
But one thing this development confirms is that Bumi Armada is a merger and acquisition target.
The merger, if it happens, could confirm speculation that the reclusive Ananda is looking to pare down his stake or exit as the 86-year tycoon has no clear successor.
2 hours ago
as informed earlier, armada is wayyy undervalued last week. So its a no brainer....
25 minutes ago
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6 days ago