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AmInvestment maintains 'buy' call on Bumi Armada, higher SOP fair value

Last update: 23/10/2019
KUALA LUMPUR, Oct 23 -- AmInvestment Bank Bhd has maintained its "buy" recommendation on oil and gas support services provider, Bumi Armada Bhd, with a higher sum-of-parts (SOP)-based fair value of 54 sen per share from 42 sen per share set earlier.

The "buy" call was in spite of the company's share price falling as much as 24 per cent to 36.5 sen at the final trading hour, before recouping some of it’s lost to close at 40 sen on Tuesday.

Bumi Armada was the most actively traded share on Bursa Malaysia yesterday with about 170 million shares changing hands.

In a note today, AmInvestment described the sell-down on Bumi Armada’s shares on Tuesday as overblown.

Bumi Armada’s shares were likely sold down yesterday on news that independent UK-based exploration and production operator EnQuest, currently with a market cap of £296 million (RM1.6 billion), has 'proactively down-manned' the Thistle platform on Monday in a precautionary move, after a preliminary subsea structural inspection related to a support element on a redundant subsea storage tank.

According to the research house, the incident at the Thistle platform was not related to Kraken oil field in East Shetland Basin where Bumi Armada was awarded a US$1billion floating production, storage and offloading (FPSO) vessel charter in 2012 by EnQuest.

"Furthermore, the management views that the worst is over for Armada Kraken’s operational performance, we view the sell-down on Bumi Armada’s shares as overblown," it said.

At 10.34 am, Bumi Armada was the most actively traded stocks on the local bourse, with its share price rising 2.5 sen to 42.5 sen and registered a volume of about 214.52 million shares.


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