Armada Sterling V is expected to see first oil next week though the acceptance test certificate is still ongoing with each test requiring 3-4 days.On its financing, the FPSO has successfully achieved financial close and has fully drawn down USD948m project financing facility to repay its USD930m bridging loan facility.
Technically, BA looks really bad as it hit 50 sen today. Anyone can advise where the next technical support is.. or still maintain 50.5 sen as a good support base. Some tell me support 48 sen and resistance at 54 sen. 50.5 sen is the base now.
Looking at BAs interest cost in Q3 2023 of RM107M on debts of 4.5B, looks like BAs average cost of debt is abt 10% pa. This is based on companys analyst brief deck on their website. With Brent droping lower it adds to the problem. CGS has put a fair value of 40 sen if there is no extension of firm contract and 84 sen if 100% of extension is achieved with a discount rate/ factor of 13%. With borrowing cost at 10% a fair Discount factor should be 15 to 18%. Basically would u want to lend BA @ 10% or be a shareholder at 13%. I dont mind being a shareholder at 15 to 18% returns. We may see a correction but I am fairly bullish for it to hit 70 sen in 24 months provided karken, ASV1, ASV2, and Olombendo performs (these are the main drivers, rest is not important). TGT1, extension willmadd to the valuation. Enjoy the journey with BA and to share I will buy more if BA drops. I love free cash flows and not profits but mgmt MUST deliver.
In 24 mths if BA can deliver and with Akai comming on stream, we may see 1.00, provided Brent stays at 80 but if BA fails, its UGLY. Again, lets "enjoy" the ride and journey with BA. High risk, high rewards. Buy within ur means or sell if you are over exposed.
You must understand, this is another good part of i3 forum. If any present comment contradict a past comment, you can quickly delete a past comment as fast as you can to avoid being rediculed after that.
i3lurker, You forget to mention while I am happily enjoy my free bintang beer and lobster on jaks trading gain, Mike-tikus stole from me again and trapped himself in Jaks for donkey months. FORCED to promote Jaks day and night 24/7/365 non stop to no avail.
Posted by i3lurker > Dec 7, 2023 9:34 AM | Report Abuse Satanic Accuser MikeCheatYouCrazy stole from sslee ...
buy HRC buy Petron
so I just rinse and repeat and FORCED Satanic Accuser MikeCheatYouCrazy to buy Armada 🤣
How bad can the impact of Sterling V first oil delay versus Kraken shut down before? Are the investors including some here overreacting to this Sterling V first oil delay further preceded by many delays already? Is the Armada's 30 % share of this FPSO so critical that it may disrupt the free cash flow that Armada is generating now from overall operations? I look forward to some wisdom sharing from our wise investors here. Thanks
“It’s built into the system that stocks get mispriced,” Warren Buffett said at the 2012 Berkshire Hathaway Annual Meeting.
There are several reasons why mispricing can occur from market inefficiencies to behavioural factors. I don’t really try to analyse the reasons for the mispricing, but rather look for opportunities for this.
Armada ROE had been trailing those of my 2 reference Bursa energy services companies – Dayang and Deleum for many years since 2012. But over the past 2 years, Armada ROE had overtaken those of Dayang and Deleum https://www.youtube.com/watch?v=quk378SFfCg
At the same time when you look at the trends of the ROE and market price for Armada, you can see that while the ROE has shown improvements over the past 4 years, there has hardly been any improvement in the market price.
I would consider this a mispricing opportunity that warrants a deeper look.
Sometimes things are not as they seem. As things stand, Bumi Armada's ROE and EPS is "high" but if you look into the future based on their firm contracts, this is only temporary. From Y2025 onwards, the ROE will start falling as the TGT, Sterling II and Kraken FPSO contracts expire. The Kraken contract is a key turning point as even if it is extended into the option period, it will be at a significantly lower day rate (though partially mitigated by lower borrowing/depreciation expenses as well).
And Bumi Armada's ROE and EPS will fall off a cliff in 2030 when the Olombendo FPSO firm contract period ends (even if it is extended into the option period, the profitability will be significantly lower).
2 to 3 years ago, when the share price was under 30 sen and the ROE/EPS started recovering strongly, Bumi Armada was a great buy. The Kraken turning point in Y2025 still seemed far away, there seemed to be time to lock-in a large scale FPSO contract in the mean time to replenish the orderbook.
Yet the years have passed and Bumi Armada has pretty much exited the profitable FPSO business due to reputational and skillset issues. Now they have turned the focus to the green space (FSRU, FLNG, FSCIU) but there's nothing to show and the profitability will unlikely be as good as FPSOs.
Add to that, the delays with Armada Sterling V, the one small glimmer of growth. And we have a dud.
Mind you, Bumi Armada is still a decent buy at 50 sen. Heck I'm holding more than half a million shares and haven't sold (in fact I added during the Kraken fiasco). But it's not hard to see why Bumi Armada's valuation is undemanding in the market.
As far as hidden value goes, Bumi Armada doesn't have much of it any longer. So the only thing any of us can do, is hope that they win new contracts (and win them soon!) and their current contracts see lengthy extensions.
TLDR: Ignore the high ROE, low P/B and low P/E ratios. They don't give the full picture, and if you buy into Bumi Armada right now just based on that premise, things may not go so well.
Yinson is not necessarily a better buy. For starters, it is not "cheap" as there is a lot of expectations baked into the share price already (quite the opposite as Bumi Armada). And there is considerable project execution risk as they are concurrently working on 3-4 FPSOs.
While Yinson may yet turn out to be a decent investment, the "easy money" has been made.
"In Cluster-II, commercial production from one gas field has already commenced from March 2020 and commercial production of crude oil is scheduled for May 2024In Cluster-II, commercial production from one gas field has already commenced from March 2020 and commercial production of crude oil is scheduled for May 2024. The project is likely to achieve full completion by 2024."
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....