KUALA LUMPUR, Nov 11 -- Alliance Research has set a “buy” call on Bumi Armada Bhd for the international offshore energy facilities and services provider's offshore support vessels (OSV) recovery and resolution of Kraken issues.
In a note today, the research house said it believed the pickup in the industry's utilisation rates for OSV is expected to drive utilisation for Bumi Armada’s vessels higher.
“There are already noticeable improvements in the second quarter financial year 2019 (FY19) and the company’s plan to sell more idle OSVs would lift utilisation rates higher, while bringing overall operational cost down,” it said.
Bumi Armada's floating production, storage and offloading (FPSO) segment improved in the first half of the financial year 2019 due to the resolution of issues regarding its Kraken FPSO vessel, which operates in the North Sea under extremely harsh conditions.
“There were unidentifiable issues previously. Bumi Armada sent a senior staff to oversee the vessel for three months and spotted operational and technical inefficiencies. It decided to replace five of its technical leads in the second quarter FY19, which improved profits by 34 per cent quarter-on-quarter.
“Kraken’s earnings are expected to improve marginally in third quarter FY19. There are no operational problems so far for its remaining vessels and everything is running according to plan,” Alliance Research added.
At 11.42 am, shares of Bumi Armada fell half-a-sen to 47 sen with 20.12 million shares transacted.