Bumi Armada Berhad: Results in line despite forex headwinds

Bumi Armada’s 9MFY24 core net profit of RM766.8m met expectations despite forex headwinds. 3QFY24 saw a 0.6% qoq dip due to weaker USD/MYR and increased expenses. YoY, profits surged 41.2%, supported by higher revenue and lower finance costs. Debt refinancing and stronger USD outlook improve prospects. Maintain BUY at RM0.76.

Bumi Armada key highlights

9MFY24 Core Net Profit: RM766.8m, meeting expectations and accounting for 77% of internal and 85.5% of consensus full-year forecasts.

3QFY24 Performance: Core net profit dipped 0.6% QoQ (excluding forex losses of RM44.9m), due to lower revenue (-4.7%), weaker USD/MYR exchange rates, absence of variation order for Olombendo FPSO (booked in 2QFY24), and depreciation/finance costs for Sterling V FPSO, which commenced operations on July 1, 2024.

YoY/YTD Growth: Core net profit surged 41.2% YoY and 75.1% YTD, driven by revenue growth (+5.2% YoY, +17.0% YTD) and lower finance costs (-9.5% YoY, -10.3% YTD).

Notable Updates

Kraken FPSO Impact: Management flagged potential impairments for Kraken FPSO in 4QFY24, which may dampen headline net profit. However, core net profit is expected to improve with a stronger USD against MYR.

Debt Management: Borrowings reduced to RM3.7bn as of 3QFY24 (from RM4.4bn in FY23). Liquidity risks mitigated with a USD400m loan secured for refinancing expiring RM1.5bn sukuk.

Recommendation

BUY Rating Maintained: Target price remains at RM0.76, based on 0.6x FY25 BVPS.

While forex challenges and one-off items impacted 3QFY24 results, strong YoY performance, effective debt management, and improving fundamentals keep the long-term outlook favorable.