Bumi Armada ice class vessels sale to improve recurring earnings

KUALA LUMPUR: Bumi Armada Bhd's recurring earnings in FY22 and FY23 are expected to improve following the sale of its ice class vessel companies, says RHB Research.

In a report, the research firm said the absence of losses from these companies will bolster recurring earnings by 6% to 8% over the two financial years.

This is despite the sale incurring a one-off disposal loss of RM25mil, which is equivalent to 4% of RHB's FY22 earnings forecast.

Subsequently, RHB said it projects an improved balance sheet on the back of healthy operating cash flow, led by stable FPSO operations and continuous asset monetisation.

"We maintain our target price at 62 sen as we do not incorporate the offshore marine services assets into our valuation.

"Our target price also incorporates a 2% ESG discount, based on a scoring of 2.9," said RHB, while reiterating its "buy" recommendation.

In a bourse filing yesterday, Bumi Armada proposed to dispose of its four wholly owned subsidiaries, which own three ice class vessels, to Russia's PJSC Lukoil for US$44.5mil (RM186.6mil) cash.

The disposal is expected to be completed in 1Q22.

According to RHB, the companies recorded a combined loss after taxation of RM56.6mil in 9M21, and have combined net assets of MYR219.9mil as at 3Q21.

Bumi Armada has said the bulk of the proceeds amounting to about US$38mil will be used to reduce corporate debt while the remaining US$6.5mil will be kept for working capital purposes.
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

Bumi Armada , ice vessel , PJSC Lukoil


Next In Business News

Poor skinny kid from Malaysia makes it really big
Brent could push past US$150/bbl if Russian oil exports shrink, BofA says
Indonesia to allocate about 1 million tonnes of palm oil for export
UK equities record best week since mid-March
Oil settles up ahead of US driving season
World stock markets rally, treasury yields fall on inflation data
Wall St Week Ahead-Stock rally fanned by hopes of Fed 'past peak hawkishness'
Embracing sustainability
Mortgage rates drop to shore up housing sector amid Covid woes
No more low for central banks

Others Also Read