ARMADA (5210) : MIDF Research maintains Buy on Bumi Armada
KUALA LUMPUR: MIDF Research has maintained its Buy recommendation on Bumi Armada with a target price of RM1.69, based on EPS15 of 9.4 sen pegged to PER15 of 18 times.
In a note on Friday, the research house said it believed the fundamentals of the company remain intact and that the company's clientele will still be financially able to provide stable cash flows to the company.
"In comparison to the shares of its global peers such as Fred Olsen, BW Offshore, SBM, MODEC and Teekay which normally trade in the teens, Bumi Armada has been trading at a large premium in excess of 20 times PER. As such, we could now be experiencing a period of normalisation of valuations," it said.
In times of suppressed oil prices, the company noted that there might be slippages in terms of new FPSO contract awards and OSV rates.
"However, we believe that Bumi Armada will be able to weather the storm as the large portion of its orderbook consists of fixed long-term FPSO contracts with extension options and only 9% consists of OSV contracts.
"Moreover, market views indicate that there might be a slight oversupply of low powered anchor handlers and straight supply vessels. However, Bumi Armada's fleet of OSVs generally constitutes mid-range powered OSVs in excess of 5,116bhp," it said.
http://www.thestar.com.my
KUALA LUMPUR: MIDF Research has maintained its Buy recommendation on Bumi Armada with a target price of RM1.69, based on EPS15 of 9.4 sen pegged to PER15 of 18 times.
In a note on Friday, the research house said it believed the fundamentals of the company remain intact and that the company's clientele will still be financially able to provide stable cash flows to the company.
"In comparison to the shares of its global peers such as Fred Olsen, BW Offshore, SBM, MODEC and Teekay which normally trade in the teens, Bumi Armada has been trading at a large premium in excess of 20 times PER. As such, we could now be experiencing a period of normalisation of valuations," it said.
In times of suppressed oil prices, the company noted that there might be slippages in terms of new FPSO contract awards and OSV rates.
"However, we believe that Bumi Armada will be able to weather the storm as the large portion of its orderbook consists of fixed long-term FPSO contracts with extension options and only 9% consists of OSV contracts.
"Moreover, market views indicate that there might be a slight oversupply of low powered anchor handlers and straight supply vessels. However, Bumi Armada's fleet of OSVs generally constitutes mid-range powered OSVs in excess of 5,116bhp," it said.
http://www.thestar.com.my
