KUALA LUMPUR: Bumi Armada Bhd will have a record-high net profit of RM844 million in the fiscal year 2024 (FY24), according to Maybank Investment Bank (Maybank IB).
The investment bank said among the factors that will support its growth are the recognition of its bareboat charter contract (BBC) for Sterling V floating production storage and offloading (FPSO) in April and a further decline in finance costs.
"We trim financial year 2023 (FY23) FY23-24E net profit by 0.5 per cent 1.1 per cent while leaving FY25 estimates unchanged for Bumi Armada to account for a delay in the recognition of a bareboat charter to April 2024 by its 30 per cent-owned Armada Sterling V FPSO as Oil and Natural Gas Corporation Limited (ONGC) had faced multiple delays in achieving first oil in its KG-DWN-98/2 development.
"ONGC has confirmed that it has achieved its first oil production from the deep-water KG-DWN-98/2 block on Jan 7, 2024. While first oil has been achieved, Armada Sterling V FPSO may have yet to achieve final acceptance, which would lead to the recognition of the bareboat charter of the asset.
"While we understand that the FPSO has already achieved hook-up, Bumi Armada is still waiting for ONGC to conduct the necessary acceptance tests," it said in a note.
It added that the resolved mishap on the company's Kraken FPSO will also be a catalyst to support the company's net profit moving forward.
On May 29, 2023, Kraken FPSO had a complete shutdown following the failure of three out of four of its critical HSP transformers. It achieved 100 per cent production on Aug 7, 2023.
"We note the major downtime happened in the second quarter of 2023, which caused Bumi Armada's core net profit to dip to RM47 million in the quarter.
"Core earnings improved to RM181 million in Q3 2023, and our revised FY23E core net profit forecast implies a further sequential core net profit improvement in Q4 2023 to RM210 million (back to status quo)."
It maintained the 'buy' call on the company with a lower target price of 65 sen.
