PETALING JAYA: Bumi Armada Bhd’s recent financial results came in within analyst expectations, and moving forward, the international offshore energy facilities and services provider is expected to see healthy operating cash flows.

       RHB Research in a report to clients said Bumi Armada’s balance sheet is expected to improve on the back of a healthy operating cash flow, led by stable floating production system (FPSO) operations and continuous asset monetisation.

       “At 103% and 113% of our and street full-year estimates, financial year 2021 (FY21) earnings of RM669mil, a 41% year-on-year (y-o-y) increase, came in with our expectations.

       “Post the ice-class vessel disposal, we have been guided that the offshore marine services unit now has three offshore support vessels, two sub-sea construction vessels, and one joint venture sub-sea construction vessel,” it noted.

       It said while Bumi Armada had secured new jobs worth US$50mil (RM210mil) for the construction vessels from Lukoil, it did not discount the possibility of works being interrupted due to relevant sanctions being imposed, as a result of Russia’s invasion of Ukraine.

       “Meanwhile, following repayment in January, its remaining balance of Tranche 1 Term Loan Facilities is US$27mil (RM113.5mil), with scheduled amortisation and final maturity in Nov 2022.

       “Overall, operating cash flow in FY21 improved 50%, with better working capital management. Net gearing also dipped to 1.55 times in the fourth quarter of 2021,” RHB said.

       Meanwhile in its report, CGS-CIMB said it expected Bumi Armada’s FY22 core net profit to decline 11% as FPSO profits typically declined on a year-to-year basis under finance lease accounting principles.

       Additionally, it said the three ice-class vessels on long-term charter to Russia’s Lukoil were sold on Jan 20 and will no longer contribute the RM35mil in core net profit that they had contributed in FY21.

       Still, CGS-CIMB raised Bumi Armad’s stock target price to 55 sen, on the back of its raising FY22-FY23 core earnings per share forecasts by 20%-25% on the back of lower head office expenses.

       Bumi Armada’s net profit for the fourth quarter ended Dec 31, 2021, was down 18% year-on-year to RM118mil from RM144.14mil, due largely to other lower operating income and some impairment losses on its vessels.

       Its revenue for the quarter also dropped to RM513.05mil from RM592.15mil earlier.

       However, for FY21, Bumi Armada saw its net profit increase to RM574.07mil from RM125.57mil, on the back of lower sales of RM2.16bil against RM2.24bil earlier.

       The company noted that this was the highest full-year net profit since its listing exercise back in FY11.

       At last look, Bumi Armada’s shares were at 48.5 sen apiece, valuing the whole group at some RM2.9bil.