Bumi Armada rebounds after saying oil rout has little impact

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(Dec 2): Bumi Armada Bhd., a Malaysian oil and gas services provider, climbed from a record low after saying the oil rout and a cut in spending by the state-owned energy company will have a “minimal” impact on earnings.

The stock rose 5.9 percent at 10:01 a.m. in Kuala Lumpur, after a three-day, 26 percent slump. The company has a wide customer base with a presence in more than 18 countries, the company said by e-mail to Bloomberg News. Its projects are long- term in nature with some extending till 2048, it said.

Bumi Armada sank the most on record yesterday after oil slid to a five-year low and a spending cut of as much as 20 percent by Petroliam Nasional Bhd. in 2015 prompted a selloff in oil and gas services shares. The share declines helped drag the benchmark stock index to its steepest loss in 22 months.

“Short-term sentiment does not reflect fundamentals,” Kong Ho Meng, an analyst at RHB Research Institute Sdn., wrote in a report today. “The multiples do not accurately reflect the fundamentals of the sector, given that some stocks have long- term cash-flow visibility, proven track record and support from sizable firm orderbook.”

Bumi Armada said while 2015 will be a “challenging” year, it has committed contracts going forward, given its total order book of 33.6 billion ringgit ($9.8 billion). Rivals Dialog Group Bhd. rose 4 percent while UMW Oil & Gas Corp. and SapuraKencana Petroleum Bhd. rebounded from record declines.