$ARMADA / 5210 (BUMI ARMADA BERHAD)
Research by Public
Outperform - TP RM0.80

"Commencing Sterling V"

Bumi Armada (BAB) recorded 2QFY24 core net profit of RM255.3m, increasing by 23.3% YoY in the absence severe impact from Floating Production Storage Offloading (FPSO) Armada Kraken’s shut down incident back in May 2023 – September 2023. On a QoQ basis, the numbers were flattish at +2.3% as higher JV and associate contribution offset the loss from bumper revenue seen in 1QFY24. Overall, 1HFY24 numbers are above our and consensus estimates at 60% of full year forecasts due to lumpy revenue recognition for engineering services. BAB has completed final acceptance test for its 30%-owned Armada Sterling V FPSO, effective 1st July 2024. Moving forward, the FPSO is entitled for full charter rate as compared to 30% prior to final acceptance. On a separate note, Armada TGT1 FPSO is high likely to be extended for another two years after the field operator received approval for extension. All in, we increase our estimates by 18%/20%/54% for FY24/25/26 forecast to account for lower reimbursable cost with the commencement of Sterling V and 2 years extension of TGT1. We retain our Outperform call with higher SOP based TP of RM0.80 (from RM0.65), after factoring in the earnings changes and net gearing position of 0.44x.

Analyst:
Khairul Fahmi, CFA
Khairul.fahmi@publicinvestbank.com.my