KUALA LUMPUR (Nov 25): CGS-CIMB Securities has maintained its “Add” rating on Bumi Armada Bhd (BAB) at 44 sen with a higher target price (TP) of 57 sen and said BAB’s 9M22 core net profit outperformed at 92% of house previous FY22F forecast (79% of consensus), due to pre-FEED profits in 2Q22 and 3Q22.
In a note on Thursday (Nov 24), the research house said that next year, BAB can also look forward to being potentially awarded TotalEnergies’ FPSO Cameia EPCC project, as BAB is in pole position to win the contract, citing industry newspaper Upstream.
CGS-CIMB said this is a potential rerating catalyst.
“BAB will not own the asset, hence the risk of a rights issue is minimal, in our view.
“Downside risks include a potential rights issue should BAB win a separate large FPSO project on a build-own-lease basis.
“Reiterate Add with higher SOP-based TP of 57 sen by rolling forward to end-CY23F, partially offset by a higher risk-free rate of 4.5% (from 4% previously),” it said.