Bumi Armada’s 1HFY12 results came in below consensus and our expectations, accounting for 37.2% and 31.0% of both sets of full-year forecasts respectively. The poorer-than-expected results were mainly due to lower revenue contribution from its oil field development segment. We are downgrading our FY12-13 earnings forecasts by 20% for both years. Maintain NEUTRAL, with a slightly lower FV of RM4.15, based on sum-of-parts valuation, pegged to FY12 earnings previously. We are now rolling over our valuations to FY13 earnings.
Below expectations. Bumi Armada’s 1HFY12 results came in below consensus and our expectations, making up only 37.2% and 31.0% of our and consensus’ full-year forecasts respectively. While revenue shrank 6.4% y-o-y, earnings grew by 27.6% y-o-y due to improved fleet utilization in its offshore support vessel business.
Downgrading FY12 and FY13 earnings forecasts by 20%. Our downgrade is in line with the poorer-than-expected 1HFY12 results as well as on anticipation of a difficult operating environment. Factors such as uncertainties arising from Europe’s protracted sovereign debt crisis, political upheavals in the Middle East and sluggish world economic growth will cast a gloom over Bumi Armada’s business in the near term.
Maintain NEUTRAL. We are maintain our NEUTRAL recommendation on the stock and revising lower our FV to RM4.15, based on sum-of-parts valuation (previously pegged to FY12 earnings), as we now roll over our valuations to FY13 earnings. While we like the group’s standing as a one-stop solutions provider in the oil & gas industry, the difficult operating environment coupled with lingering fears over Europe’s protracted economic woes will continue to haunt Bumi Armada in the near term.
Source: OSK
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