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BIMB SECURITIES RESEARCH

MARKET INSIGHT
PP16795/03/2013(031743)

Wednesday, 6 June, 2012

Company Update

Bumi Armada
Maximising Assets Value
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 11,421.0 Equity 2,928.5 4.53 3.03 7.4 27.2% Y Altman Z-score YTD price chg YTD KLCI chg Beta Major Shareholders Objektif Bersatu SB Ombak Damai SB EPF n.a -4.9% 1.9% 0.9 42.41% 11.33% 6.81%

Buy
Price: RM3.90 Target Price: RM4.44 Bumi Armada announced that Price:secured a short term it has
contract for its Derrik Pipelay Barge, Armada Installer. The vessel will operate in the Caspian Sea, off Turkmenistan. Benchmarked against the daily charter rate for its recent Lukoil contract, we estimate the contract value to be between RM15m to RM30m. This came in as no surprise as Management had guided that the Group is bidding for more contracts for the vessel. We maintain our earnings forecast and our Buy call at target price of RM4.44. The contract. It is a short term contract from Momentum Engineering to lay approximately 15km of various size pipelines in the Caspian Sea. The charter period is for initial 30 days commencing from early June 2012 and attached with an extension option of 15 days. Contract value is not disclosed but we estimated it to be between RM15m to RM30m, based on the charter rate secured under the USD200m contract with Lukoil recently. The vessel is the one of the only two such vessels operating in the landlocked region. Maximising asset value. To recap, the vessels utilization in the 1QFY12 was low and only entitled the minimum guaranteed utilization of 70%s payment from Petronas, the main charterer. The vessel had in April secured a 3 year contract worth USD200m from Lukoil which we understand revenue will be recognized from this quarter onwards and together with this contract we expect utilization rate to climb up for the rest of the year. While it is impossible to add-in new large contract for the vessel due to the existing 2 large contract commitments, we see room for continuous slot-in of smaller contracts into its schedule. No change in forecast. While this contract would push up the utilization rate for the vessel, we are keeping our forecast unchanged as the contract value is estimated to be marginal. View & Valuation. With firm orderbook of RM7bn of which about RM1bn is secured this year, we continue to like the stock for its delivery track record. Another major near term catalyst would be on its 2 tenders for marginal field development where results should be made known this year. Maintain Buy at target price of RM4.44 based on PER of 23x on FY12 EPS of 19.3sen.

Share Performance (%) Absolute vs. KLCI Financial Highlights FYE 31 Dec Turnover (RMm) 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 -3.9% -2.1%

3mth -5.6% -3.8%

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% 41.2 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% 32.6 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% 31.8 2.5 0.6% 1.21

2012E 2,152.3 754.9 672.4 564.8 35.1% 31.2% -16.0% 24.3% 6.4% 0.76 19.3 57.0% 20.2 3.9 1.0% 1.38

2013E 2,883.7 978.3 865.6 718.5 33.9% 30.0% -17.0% 24.8% 6.8% 0.64 24.5 27.2% 15.9 4.9 1.3% 1.68

40.8% 70.4% 75.4% 84.9%

69.6% 39.1% 35.0% 26.4%

24.4% 11.3% 13.7% 2.5%

39.4% 45.7% 54.3% 57.0%

34.0% 29.6% 28.7% 27.2%

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

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6 June 2012
DEFINITION OF RATINGS BIMB Securities uses the following rating system:

Company Update: Bumi Armada

STOCK RECOMMENDATION BUY Total return (price appreciation plus dividend yield) is expected to exceed 10% in the next 12 months. TRADING BUY Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain. NEUTRAL Share price may fall within the range of +/- 10% over the next 12 months TAKE PROFIT Target price has been attained. Fundamentals remain intact. Look to accumulate at lower levels. TRADING SELL Share price may fall by more than 15% in the next 3 months. SELL Share price may fall by more than 10% over the next 12 months. NOT RATED Stock is not within regular research coverage. 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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