PETALING JAYA: Bumi Armada Bhd’s balance sheet recovery and borrowings are becoming more manageable as it meets with its debt repayment obligations.

       After the group released its nine-month earnings, some analysts have raised their profit projections. The consensus profit projection for financial year (FY) 2021 is much higher than last year.

       The net profit projected for the full year is RM592mil versus RM125mil reported last year.

       Kenanga Research raised its profit projections for FY 2021 to 2022 by 26% and 8% respectively to account for higher floating production and operations (FPO) and offshore marine services (OMS) contributions, as well as lower finance cost assumption.RHB Research has also raised it FY21-FY23 earnings by 9% to 14% after imputing lower operating costs for both segments.

       Coupled with operations which are now more stable, Kenanga Research felt that the group’s borrowing risk has greatly diminished.The company reported nine-month ending Sept 30, 2021 results, which were above most analysts’ expectations.

       Bumi Armada posted core net profit of RM533mil (arrived after adjusting for non-core items namely impairments, unrealised foreign exchange, gains on disposals etc). This was above expectations at 104% and 90% of Kenanga Research and the consensus full year estimates.

       This was led by stronger-than-expected contributions from FPO on higher uptime, particularly for Armada Kraken floating production storage and offloading (FPSO).

       The stronger-than-expected contributions came from its offshore marine services amid the continued downsizing of the segment and lower-than-expected finance costs.

       During the quarter, the group further disposed of four vessels in its OMS fleet, leaving a remainder of 10 vessels.

       This, Kenanga Research said, was in line with the group’s overall strategy of gradually exiting the business to be more focused in the FPSO space in pursuit of a more stable cash flow business model.

       It added that the company also continued its effort of paring down its borrowings, with net-gearing currently standing at 1.7 times (down from 1.9 times last quarter).

       Since end-2019, the group’s total debts had been reduced by 22%, down to RM7.4bil from RM9.5bil.

       RHB said it raised the target price (TP) to 62 sen a share (from 57 sen) post earnings upgrade as well as the incorporation of a 2% environmental, social and governance discount based on a scoring of 2.9. It maintains a “buy’’ on the stock.

       Kenanga Research also maintained its ‘‘outperform’’ call with a higher TP of 57 sen, from 53 sen previously.

       Risks included downtime in Armada Kraken FPSO, costs overrun, and failure to meet debt repayment obligations.