Bumi Armada’s core net profit improved by 26 per cent q-o-q, helped by improved vessel availability for its Armada Kraken FPSO vessel, coupled with the lowered depreciation expenses, as well as finance costs due to debt repayment.
KUCHING (June 2): Bumi Armada Bhd’s (Bumi Armada) core net profit of RM177 million for its first quarter of financial year 2022 (1QFY22) is deemed to be within expectations at 28 per cent of consensus full-year earnings estimates.
Kenanga Investment Bank Bhd (Kenanga Research) saw continued improvement in earnings, as quarter on quarter (q-o-q).
Bumi Armada’s core net profit improved by 26 per cent q-o-q, helped by improved vessel availability for its Armada Kraken floating, production, storage and offloading (FPSO) vessel, coupled with the lowered depreciation expenses, as well as finance costs due to debt repayment.
“Year on year (y-o-y), core net profit also came in better by 20 per cent, similarly thanks to the higher vessel availability for Armada Kraken FPSO, and lower depreciation and finance costs,” it said in its analysis.
“Following the earlier disposal of its OSVs and turnaround of its FPO operations, the group has managed to further reduce its net-gearing down to 1.3 times. In fact, gearing levels have been at the lowest since 2015.
“With its balance sheet turning more palatable, management is now gradually eyeing expansion, and may start participating in global FPSO opportunities within the year.”
MIDF Amanah Investment Bank Bhd (MIDF Research) saw that Bumi Armada’s orderbook stood at a firm RM13.2 billion, with 82 per cent from its wholly-owned FPO units.
It added that certain contracts contain extension options beyond firm contract period with a total potential value of RM9 billion.
“The group’s cash balance, including cash held by discontinued operations, decreased by 10 per cent q-o-q to RM758 million due to repaid US$107 million debt paid in 1QFY21, and the disposal of four OSVs including three ice class vessels (ICVs),” it added.
The group also reported that as of 1QFY22, OSVs AT300, AT501 and Armada Hibiscus continue to operate without lost time injury; Climate Change Policy released and committed to as part of its Sustainability Statement; and disclosure of emission data across its operations improved.
“The promise brought forth by the rising oil prices had pushed for more activities across the entire value chain of the oil and gas sector, which includes the FPSO subsegment,” MIDF Research said.
“Bumi Armada foresees its business to remain robust until the year end, as it continues to pursue new opportunities and focus on safety of all employees, partners and assets; integrated ESG strategy; excellent operational performance of its vessels; maintenance of vital partnerships; secure new contracts; and monetise remaining surplus assets and further improve the balance sheet.
“Despite Bumi Armada’s 1QFY22 results came in above our expectation, we retain our FY22 forecast as we believe the group forward performance remains in range with expected trajectory.
“The global FPSO market size is expected to rise from US$7 billion to US$17 billion by 2027, in tandem with the high oil prices enticing upstream and midstream activities, and the rising number of offshore reserves discovery, and the increasing demand for hydrocarbons worldwide – all which would benefit Bumi Armada’s operations in the next coming quarters.”
from Borneo Post Online https://bit.ly/3PXylOk
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