KUALA LUMPUR (March 29): Hong Leong Investment Bank (HLIB) Retail Research said Bumi Armada Bhd is currently challenging its mid-term resistance of 43 sen after staging a 14% oversold rebound. 

“A successful breakout above this hurdle will spur the prices toward the RM0.47-0.50 levels. Cut loss at RM0.38,” it said in a technical traker note on Tuesday (March 29). 

Overall, HLIB reckons that the Russia-Ukraine conflict has no material impact on Bumi Armada as Lukoil has not been sanctioned by the US or Europe. 

“Based on our channel check with the group's management, there has been no ground indication of default/non-payment risk from Lukoil,” it said. 

“Despite vast improvement in its balance sheet, coupled with a better earnings outlook, Armada is currently trading at an undemanding valuation of 3.5 times financial year ending Dec 31, 2022 (FY22) price-earnings (72% and 50% discounts against its five-year average of 12.5 times and HLIB’s TP (target price) parameter of seven times respectively),” said HLIB.

Shrugging off Lukoil’s risk, it believes that the battered stock offers an excellent opportunity for investors to accumulate on weakness.