- We maintain our BUY call on Bumi Armada, with an unchanged
sum-of-parts-based fair value of RM5.05/share, which implies an FY12F PE of
26x.
- Bumi Armada has been awarded a US$200mil (RM614mil)
contract by OAO Lukoil’s subsidiary OOO Lukoil-Nizhnevolzhskneft to engineer,
procure, install and pre-commission subsea in-field and inter-field pipelines
for the Filanovsky field in the Russian sector of the Caspian Sea.
- LukOil is one of Russia’s exploration and production
groups. The scope of works, which involves 9 infield/inter-field lines
measuring 90 kilometres, will be undertaken by Bumi Armada’s derrick pipe-lay
barge, the Armada Installer. This project is expected to be completed in over
32 months with the majority of works to be carried out by end-2014.
- Including the existing Petronas Carigali’s contract in
Turkmenistan, this contract will raise Bumi Armada’s transport and installation
(T&I) order book by 50% to RM1.8bil.
We have assumed fresh T&I order book assumption of RM600mil this
year. Hence, we maintain our FY12F-FY14F earnings for now, pending the award of
additional projects. In our view, the Armada Installer looks almost fully
occupied until 2014.
- Including renewable options of RM3.1bil to the group’s
firm orders, the group’s total order book has risen by 6% to an estimated
RM10.5bil – which represents 4.6x FY12F revenue. This is likely to increase as
the group is currently bidding for six FPSO contracts in Malaysia, Indonesia,
India and West Africa.
- Besides T&I jobs, the group is on the prowl to acquire
additional platform supply vessels and accommodation work boats given its
tightening asset utilisation rates. This also supports our view that marine
charter operations for the industry is reaching an inflection point, which will
lead to a significant increase in charter rates in 2H2012.
- We continue to like the stock due to the following
re-rating catalysts:- (1)Rising likelihood of new floating production storage
and offloading vessel contracts as oil & gas developments reignite
globally, (2) tightening vessel utilisation rates, and (3) premium scarcity for
oil & gas stocks with large market capitalisation.
- The stock currently trades at an attractive FY12F PE of
23x compared with SapuraCrest Petroleum’s peak of 29x in 2007.
Source: AmeSecurites
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