Bumi Armada’s balance sheet set to improve

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PETALING JAYA: Bumi Armada BhdRecent financial results are in line with analysts’ expectations and looking forward, the international provider of offshore energy facilities and services is expected to post healthy operating cash flow.

RHB Research, in a report to clients, said Bumi Armada’s balance sheet is expected to improve thanks to healthy operating cash flow, led by stable floating production system (FPSO) operations and continued monetization of assets.

“At 103% and 113% of our full year estimate, full year 2021 (FY21) profit of RM669 million, a 41% year-on-year increase (year-on-year ), met our expectations.

“Following the elimination of the ice-class vessel, we have been informed that the Offshore Marine Services Unit now has three offshore support vessels, two underwater construction vessels and one underwater construction vessel. joint venture,” he noted.

He said that although Bumi Armada secured new jobs worth US$50 million (RM210 million) for Lukoil’s construction vessels, he did not rule out the possibility of work being halted. due to the relevant sanctions imposed, following Russia’s invasion of Ukraine.

“Meanwhile, after repayment in January, its remaining balance on the Tranche 1 term loan facilities is US$27 million (RM113.5 million), with scheduled amortization and final maturity in November 2022.

“Overall, cash flow from operations in FY21 improved by 50%, thanks to better working capital management. Net debt also fell to 1.55x in Q4 2021,” RHB said.

Meanwhile, in its report, CGS-CIMB said it expects Bumi Armada’s FY22 core net profit to decline 11% as FPSO earnings generally decline by a year. on the other according to finance lease accounting principles.

Furthermore, he said the three ice-class vessels on long-term charter to Russia’s Lukoil were sold on January 20 and will no longer contribute to the RM35 million base net profit they had contributed during the year. exercise 21.

Still, CGS-CIMB raised the target price of Bumi Armad shares to 55 sen, based on its FY22-FY23 basic earnings per share forecast of 20% to 25% due to lower head office spending. .

Bumi Armada’s net profit for the fourth quarter ended December 31, 2021 decreased by 18% year-on-year from RM144.14 million to RM118 million, largely due to other operating income weaker values ​​and certain losses in value on its vessels.

Its revenue for the quarter also fell to RM513.05 million from RM592.15 million earlier.

However, for FY21, Bumi Armada saw its net profit drop from RM125.57 million to RM574.07 million, driven by a drop in sales of RM2.16 billion from RM2.24 billion. RM earlier.

The company noted that this was the highest annual net profit since going public in fiscal 2011.

At last look, Bumi Armada shares were at 48.5 sen each, valuing the entire group at around RM2.9 billion.

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