Reports » Malaysia
Malaysia stock market and companies daily report (December 18, 2013)
Bumi Armada Records Strong Order Book Of RM10.8b
- Afren Energy Resources had extended its contracts with Bumi Armada for the Armada Perkasa FPSO (floating production, storage and offloading vessel) by a further two years with effect from 1 July 2014, which are valued at approximately US$68 million (RM220 million).
- The original contracts for a five-year period with options to extend a further five years on an annual basis were awarded in 2008 and first extended for a one-year period in late October 2012. This extension will provide better earnings visibility for the Armada Perkasa FPSO.
- The contract will boost Bumi Armada’s outstanding order book to RM10.8 billion, including an estimate for the Kraken FPSO bareboat charter of RM2 billion. Bumi Armada is also eyeing another award for the Madura field in Indonesia but timelines are still uncertain.
Significance: Alliance IB Research has maintained a “Trading Buy” recommendation on Bumi Armada given the continued positive news flow. However, a delay in the award of new FPSO contracts as well as unplanned downtime in the vessel and transportation and installation can dampen earnings.
Daya’s MOA May Lapse But Upside Remains
- Daya Vessels, a subsidiary of Daya OCI (67 percent owned by Daya Material), has entered into a memorandum of agreement (MOA) with SBM Installer for the US$180 million or RM583 million acquisition of a new build diving support and construction vessel.
- Public IB Research views that the acquisition may likely lapse given that Daya Vessels did not appear to have the intention of purchasing the vessel, and as such did not attempt to meet the terms of the MOA. Despite this, with current contracts on hand and potential contracts it could be close to securing, exciting times lie ahead for Daya Vessels.
- The brokerage house remained conservative and did not factor in this acquisition or other potential future acquisitions into Daya Material’s current valuation. Therefore, should Daya purchase any additional assets, it is a bonus to the group’s performance and thus valuation.
Significance: Public IB Research maintained an “Outperform” call with a target price of RM0.45, but with prospects for further rerating pending the clarity of securing new oil and gas contracts. The group’s outlook remains bullish with an order book worth about RM2.1 billion which will provide earnings visibility up to FY17.
FGVH To Expand Reach Overseas
- Felda Global Ventures Holdings (FGVH) is considering buying sugarcane plantations abroad through its sugar-producing subsidiary, MSM Malaysia Holdings and has identified potential targets in Myanmar, Indonesia and Brazil.
- FGVH is of the view that the three countries have suitable areas for sugarcane plantations. Some of the criteria for consideration are the soil types, sugar yields and the cost of acquisition, and the company would give priority to buying existing sugarcane plantations.
- The company has handed out RM17.5 million in tithe payment to several tithe collection centres where representatives from Perlis, Penang and Kuala Lumpur received RM1.5 million, RM8.6 million and RM7.4 million respectively.
Significance: Notably, MSM has been importing its raw sugar early this year, which has amounted to 960,000 tonnes to date as it converted its sugarcane plantation in Perlis into a rubber estate in May last year. The move to expand overseas for its sugarcane plantation could help to reduce import costs.
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