This article first appeared in The Edge Financial Daily on May 29, 2019

Bumi Armada Bhd
(May 28, 19.5 sen)
Maintain buy with an unchanged target price of 47 sen: Bumi Armada Bhd posted a net profit of RM62.2 million for the first quarter of financial year 2019 (1QFY19), up 29% year-on-year (y-o-y) due to higher contributions from associates and joint ventures, lower depreciation and tax. However, its normalised net profit declined 30% to RM67.7 million. Operating profit declined due to lower revenue.

Revenue for 1QFY19 declined 18% y-o-y to RM491.6 million following lower contributions from the floating production and operation (FPO) — -8% y-o-y to RM425.6 million due to lower revenue from the Armada TGT floating production storage and offloading subsequent to its extension agreement in August 2018 — and the offshore marine services (OMS) — -53% y-o-y to RM66 million due to the LukOil project’s completion in December 2018.

Compared with the previous quarter, normalised net profit for 1QFY19 almost doubled to RM67.7 million despite quarterly revenue falling 15% quarter-on-quarter (q-o-q). Bumi Armada’s order book remains steady at RM19.3 billion — FPO: RM18.3 billion; OMS: RM1 billion — with another RM9.8 billion worth of potential extensions, sustaining the group’s revenue for the next few years.

The management also secured refinancing for its unsecured term loans of US$380 million (RM1.57 billion) and revolving credit facilities of US$280 million, combined into a single facility consisting of Tranche 1 facility of US$260 million and Tranche 2 facility of US$400 million, with repayment terms of over two and five years respectively. — JF Apex Securities, May 28