[%HmMB%] 
Research by HLIB
Hold - TP RM0.56

"Poised for peak earnings in FY24"

Armada chalked up core net profit of RM257.7m in 2Q24, bringing 1H24 sum to RM497.1m – which we deem above our (58%) and street (63%) forecasts. Core net profit grew slightly QoQ (+7.6%) mainly due to significantly higher contribution from JV and associates (9x) because of lumpy standby charter payments from Sterling V being backloaded to this quarter, coupled with lower costs incurred. Armada has obtained the Final Acceptance of Sterling V on 1 July, leading to the commencement of bareboat charter from 3Q24. Armada is poised to achieve record high earnings in FY24f but we believe it will peak this year given the steep decline in Kraken’s charter rates from FY25f onwards. Raise FY24/25/26f forecasts by 9%/12%/12%. Post-rolling over our valuation base year to FY25f and adjust upward equity risk premium for the stock, we downgrade the stock to HOLD call with lower SOP-based TP of RM0.56.

Analyst:
Brian Chin
[%pVmw%]

$KLSE-ARMADA 
Research by HLIB
Hold - TP RM0.56

"Poised for peak earnings in FY24"

Armada chalked up core net profit of RM257.7m in 2Q24, bringing 1H24 sum to RM497.1m – which we deem above our (58%) and street (63%) forecasts. Core net profit grew slightly QoQ (+7.6%) mainly due to significantly higher contribution from JV and associates (9x) because of lumpy standby charter payments from Sterling V being backloaded to this quarter, coupled with lower costs incurred. Armada has obtained the Final Acceptance of Sterling V on 1 July, leading to the commencement of bareboat charter from 3Q24. Armada is poised to achieve record high earnings in FY24f but we believe it will peak this year given the steep decline in Kraken’s charter rates from FY25f onwards. Raise FY24/25/26f forecasts by 9%/12%/12%. Post-rolling over our valuation base year to FY25f and adjust upward equity risk premium for the stock, we downgrade the stock to HOLD call with lower SOP-based TP of RM0.56.

Analyst:
Brian Chin
brianchy@hlib.hongleong.com.my