Bumi Armada gains 6% on RM1.1b Malta contracts

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KUALA LUMPUR (Apr 15): Bumi Armada Bhd gained as much as six sen or 6% to RM1.12 after the oil and gas support services firm secured a US$300 million (RM1.1 billion) floating storage unit (FSU) contract in Malta.

At 10.05am, Bumi Armada (fundamental: 1.05; valuation: 1.4) wiped off part of its gains to trade at RM1.11.

Some 15.78 million shares were traded, making the stock the sixth most-actively traded counter across the bourse.

In a filing with Bursa Malaysia yesterday, Bumi Armada said it had signed agreements with ElectroGas Malta Ltd to supply the liquified natural gas (LNG) storage unit to the latter.

The FSU is for a project relating to the construction and operation of an LNG receiving terminal at Delimara, Malta. The FSU contract is valid for 18 years and two months.

The FSU is expected to commence operations in 2016.

Today, Hong Leong Investment Bank Bhd analyst Jason Tan Yat Teng estimated the FSU to contribute RM15 million a year to Bumi Armada's profit, based on a  25% net profit margin assumption.

In a note to clients, Tan said the FSU's profit forecast represented a 2.4% increase to Bumi Armada's profit after tax (PAT) forecast in financial year ending December 31, 2016 (FY16).

"As we mentioned previously, Bumi Armada has a high chance to secure a FSU contract with 18 years contract duration in Europe. This marks its maiden venture into the floating LNG business in addition to its traditional FPSO (floating production, storage and offloading) and OSV (offshore support vessel) business," Tan said.

Hong Leong maintained its "buy" call for Bumi Armada shares with unchanged of target price of RM1.54.

(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.)