Friday, September 9, 2011

Bumi Armada inches up, Credit Suisse has Outperform, RM4.40

KUALA LUMPUR: Shares of Bumi Armada inched up in moderate trade at the midday break on Friday, Sept 9 in line with the firmer equities.

At 12.30pm, it was up two sen to RM3.68. There were 430,400 shares transacted at prices ranging from RM3.66 to RM3.69.'' Since Friday, Sept 2, the share price is up nine sen from RM3.59.

Credit Suisse Asia Pacific/Malaysia Equity Research had on Thursday initiated coverage on Bumi Armada with Outperform rating and a RM4.40 target price that implied 19% potential upside.

'Our target price is based on 20x FY12E earnings, in line with the average sector P/E for large-cap Singapore-Malaysia oil and gas stocks,' it said.

Credit Suisse Research said under the Economic Transformation Programme, the government is pushing to increase oil production levels through enhanced oil recovery (EOR) projects, and the development of deepwater and marginal fields.

The end of MISC's de-facto monopoly on the domestic floating production storage and offloading (FPSO) market leaves Bumi Armada well placed to tap into this development.

'Not only can the company provide FPSOs to domestic projects, such as Shell's St Joseph Chemical enhanced oil recovery (EOR) project, but it can also participate as a risk-sharing contractor to develop marginal fields in Malaysia.

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