Monday, October 3, 2011

Bumi Armada edges up in early trade as order backlog rises to RM7b

KUALA LUMPUR: Bumi Armada Bhd's shares rose in early trade on Monday, Oct 3 following its order backlog increasing to more than RM7 billion after it sealed a RM1.46 billion contract to supply and operate a floating production, storage and offloading (FPSO) system in Australia.

At 9.15am, Bumi Armada was up four sen to RM3.40 with 312,300 shares traded.

Bumi Armada last Friday said it had signed the contract with Apache Energy Ltd, a major Australian oil and gas producer, for the FPSO to be located in block WA-49-L of the Balnaves Field, north-west Australia.

The contract was for an initial four-year fixed term time charter with an option of a further four year annual extension period thereafter.

MIDF Research in a note Oct 3 maintained its Neutral rating on the stock and said given its ''cautious view on market outlook and weaker oil prices in the immediate term, it saw limited upside for BA's share price, adding that the earnings growth next year had already been factored in.

'We are anticipating a stellar FY12 EPS growth of +58.2% or equivalent to a 3-year CAGR of +21.6%.

'Our Target Price for Bumi Armada is maintained at RM3.25, pegging to 18.4x PER12, which is 0.5-SD below the sector historical multiple average since 2007. This is also in line with our estimated earnings-weighted PER of each division.

MIDF Research said that fundamentally, it favoured Bumi Armada's sizeable order book of RM7 billion which was 3.5 times its FY12F revenue, adding that earnings visibility for the next 3 years was fairly secured.

No comments:

Post a Comment