STOCK FOCUS OF THE DAY
Bumi Armada : Enters into JV for the EPCC of Madura
FPSO BUY
Bumi Armada has entered into a JV with Indian conglomerate
Shapoorji Pallonji and Co Pte Ltd (SPCL) to undertake the engineering,
procurement, conversion and construction of an FPSO. The JV (in which Bumi
Armada has a 49% stake) will then deliver the completed FPSO – for a sale price
of US$500mil – to PT AGN for charter and deployment at the Madura BD Field,
offshore East Java.
PT AGN is a consortium between Bumi Armada and PT Gema
Marine Service (PT GMS). Recall that the consortium had earlier received an
award from Husky-CNOOC Madura Limited (HCML) to supply an FPSO for the Madura
Field with a value of US$1.18bil for a firm charter period of 10 years, and
options worth US$147mil to extend for five more years.
Bumi Armada estimates that the total financial commitment
required by the JV to complete the FPSO conversion would range from US$450mil
to US$500mil. The JV is expected to fund between 20% and 45% of its total
financial commitment in the form of equity. However, the maximum funding
obligations of Bumi Armada will be limited to the US$ equivalent of RM330mil.
The FPSO is expected to be delivered in 1QFY17 which will
then be immediately deployed in the field to commence operations. Our numbers
remain unchanged at this juncture, as we have earlier expected capex of
~US$450mil for the Madura FPSO. Additionally, the JV to construct and deliver
the FPSO to PT AGN is not expected to have any material impact on Bumi Armada’s
net earnings.
Meanwhile, the group’s firm order book of ~RM24bil (with
extensions of up to RM13bil) is expected to support the group’s earnings
prospects. Substantial earnings contributions from the Kraken and 15/06 FPSO
will kick-in in FY16 and FY17 upon the commencement of operations. We maintain
our BUY recommendation with a fair value of RM1.45/share.
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(MPOB) NEUTRAL
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OVERWEIGHT
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AmResearch Sdn Bhd. The investments discussed or recommended in this report may
not be suitable for all investors. This report has been prepared for
information purposes only and is not an offer to sell or a solicitation to buy
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facts are accurate and opinions fair and reasonable, we do not represent that
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