BIMB SECURITIES RESEARCH

MARKET INSIGHT
PP16795/03/2013(031743)

Tuesday, 17 April, 2012

Company Update

Bumi Armada
Deeper Into Caspian Sea
Stock Data Bloomberg Ticker Market Cap Issued shares 52-week range (H) 52-week range (L) 3-mth avg daily volume Free Float Shariah Compliant BAB MK 13,031.7 Equity 2,928.5 4.5 3.03 2.9 29.6% Y Altman Z-score YTD price chg YTD KLCI chg Beta Major Shareholders Objektif Bersatu SB Ombak Damai SB Wijaya Sinar SB n.a 8.5% 4.4% 0.8 42.41% 11.62% 7.26%

Neutral
Bumi Armada continue its winning streaks in FY12. Yesterday it announced its subsidiary has secured a 3 year contract worth USD200m from a subsidiary of Lukoil, the largest independent oil company in Russia. We are excited with this development and expect this will open more doors for Bumi Armada in Russians large market. We upgraded our FY12 and FY13 earning projection by 4% and 8% respectively. Retained our Neutral call at new target price of RM4.65 based on 23x PER over FY12 EPS.
The contract. The 3 year contract will involve the provision of EPIC services and to cover engineering, procurement of line pipes and associated appurtenances and installation and pre-commissioning of 9 infield/inter-field lines, for a total length of about 90km for the Filanovsky field in the Caspian Sea. Its derrick pipelay barge, Armada Installer will also be deployed for this contract. More importantly. This contract aside, more strategically meaningful is that this contract marks Bumi Armadas first penetration into Russian market which is a very positive development considering Russias status as the worlds top oil producer which by extension means bigger and brighter prospects for Bumi Armada going forward. In fact its geographical expansion has been very successful and so far this year it managed to secure two OSV contracts from Brazil, another big market which is in a strong growth trajectory. Strong orderbook replenishment. YTD Bumi Armada has added about RM900m worth of long term contracts into its book which is about 10% of its orderbook size at the beginning of the year. We continue to believe the company has bright prospects of adding more sizeable long term contracts this year in particularly for it bids for FPSO contracts as well as for the St. Jospeh vessel based chemical EOR project which likely to be awarded this or next month. Forecast upgraded. We tweaked our numbers to reflect this project. While we still believe Bumi Armada to secure 2 FPSO contracts this year, however, reading some of the newsflow lately, we have pushed our contracts award date assumptions backward. All in FY12 and FY13 earnings are upgraded by 4% and 8%. View & Valuation. While we continue to like the companys fundamental, our new target price of RM4.65 based on 23x PER over FY12 EPS which offers an upside of 4% and keep our Neutral call unchanged.

Price: Target: Price:

RM4.45 RM4.65

Share Performance (%) Absolute vs. KLCI Financial Highlights FYE 31 Dec (RMm) Turnover EBIT Pretax profit Core Net Profit EBIT margin Pretax margin Effective tax rate ROE ROA Net Gearing (x) Core EPS (sen) Core EPS growth PER (x) (%) DPS (sen) Div. Yield (%) NTA/share (RM) Growth ratios Turnover EBIT Pretax profit Core Net profit Share Price Chart

1mth 8.0% 6.2%

3mth 7.2% 2.0%

12mth n.a n.a

2009 732.1 334.7 283.9 277.4 45.7% 38.8% -2.3% 41.4% 7.2% 3.54 9.5 84.9% 47.0 0.0 0.0% 0.23

2010 1,241.4 465.7 383.3 350.8 37.5% 30.9% -8.5% 40.1% 7.3% 3.59 12.0 26.4% 37.2 0.0 0.0% 0.30

2011 1,543.9 518.3 435.9 359.7 33.6% 28.2% -16.2% 19.2% 5.2% 0.50 12.3 2.5% 36.2 2.5 0.6% 1.21

2012E 2,495.5 825.1 732.1 593.0 33.1% 29.3% -19.0% 25.3% 6.7% 0.78 20.2 64.9% 22.0 4.0 0.9% 1.39

2013E 3,081.4 1,022.5 899.4 719.5 33.2% 29.2% -20.0% 24.6% 6.8% 0.65 24.6 21.3% 18.1 4.9 1.1% 1.69

40.8% 70.4% 75.4% 84.9%

69.6% 39.1% 35.0% 26.4%

24.4% 11.3% 13.7% 2.5%

61.6% 59.2% 68.0% 64.9%

23.5% 23.9% 22.8% 21.3%

Chiong Tong Chai chiongtc@bimbsec.com.my 03-26918887 ext 175

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17 April 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system: STOCK RECOMMENDATION BUY OUTPERFORM TRADING BUY NEUTRAL TRADING SELL SELL

Company Update: Bumi Armada

Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months The stock is expected to perform ahead of the market in the next 12 months The stock is expected to outperform the market in the next 3 months The stock is expected to perform in line with the market in the next 12 months The stock is expected to underperform the market in the next 3 months An expected price depreciation of more than 10% in the next 12 months

SECTOR RECOMMENDATION OVERWEIGHT The Industry as defined by the analysts coverage universe, is expected to outperform the relevant primary market index over the next 12 months NEUTRAL The Industry as defined by the analysts coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months UNDERWEIGHT The Industry as defined by the analysts coverage universe, is expected to underperform the relevant primary market index over the next 12 months Applicability of ratings The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies. Disclaimer The investments discussed or recommended in this report 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 any securities. The directors and employees of BIMB securities Sdn Bhd may from time to time have a position in or either the securities mentioned herein. Members of the BIMB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgements as of this and are subject to change without notice. BIMB Securities Sdn Bhd accepts no liability for any direct, indirect or consequential loss arising from use of this report.

Published by

BIMB SECURITIES SDN BHD (290163-X) A Participating Organisation of Bursa Malaysia Securities Berhad Level 32, Menara Multi Purpose, Capital Square, No. 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur Tel: 03-2691 8887, Fax: 03-2691 1262 http://www.bimbsec.com.my

Kenny Yee Head of Research

www.bimbsec.com.my

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