Bumi Armada up 4% after Kenanga starts coverage

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KUALA LUMPUR (July 1): Bumi Armada Bhd rose as much as five sen or 4% after Kenanga Investment Bank Bhd initiated coverage on the oil and gas support-services provider.

In a note today, Kenanga analyst Lim Sin Kiat said it initiated coverage on Bumi Armada (fundamental: 1.05; valuation: 1.4) shares with an "outperform" call and target price or RM1.55.

Bumi Armada shares were traded at an intraday high of RM1.19. At 12:30pm, the stock settled at RM1.18, with some 10 million shares traded.

Lim said although the oil and gas industry was expected to remain challenging, Bumi Armada’s earnings would be anchored by its sizeable firm order book of RM25.6 billion.

Lim said the order book was mainly underpinned by floating production, storage and offloading (FPSO) jobs.

“Beyond 2015, Armada is poised to stage phenomenal growth, with its earnings base forecasted to double from RM367.7m in FY14 to RM833.3m in FY17 when full-year contributions from its FPSOs under conversion kicks in,” the analyst said.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)