PETALING JAYA: Following a strong second quarter, several analysts have raised their financial forecast for Bumi Armada Bhd
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As the oil and gas services company continues to strengthen its balance sheet, it will also be in a better position to bid for new projects, they said.
For the three months ended June 30, 2024 (2Q24), net profit came in at RM265.96mil, up from RM118.77mil in the same quarter a year earlier. Revenue rose 31% year-on-year to RM578.86mil.
Cumulatively, six-month profit increased 58% to RM506.5mil due to stronger margins and lower tax expenses.
RHB Research, which maintains a “buy” call on the stock, lifted financial year 2024 (FY24) to FY26 earnings by 11%, 13% and 13%, respectively, while Maybank Investment Bank Research raised its earnings forecasts for that period by 12%, 16% and 16%, respectively, to account for higher profit contribution from 30%-owned vessel, Armada Sterling V.
They noted that beginning July 1, 2024, Armada Sterling V had received final acceptance, which allows it to record bareboat charter rates starting 3Q24.
On its outlook, RHB Research said Bumi Armada’s management is confident of securing charter extensions for Armada TGT beyond November 2024.
Meanwhile, the contract for Armada Kraken has been extended by one year to April 2026 at lower rates. However, in an analyst briefing, Bumi Armada flagged the possibility of potential impairment by year-end if the value-in-use of the vessel remains lower than the net book value.
While another impairment is likely, CGS International (CGSI) Research thinks the size of the impairment should be lower than in 4Q23.
“Reiterate ‘add’ with a higher target price of 79 sen, as we factor in a likely extension of the Armada TGT-1 charter extension,” said CGSI Research.
