KUALA LUMPUR (March 19): Phillip Capital has initiated coverage of Bumi Armada Bhd (BAB) with a 'buy' rating at 56 sen, with a target price of 80 sen, and said BAB is well positioned to capitalise on growing demand for floating production storage and offloading (FPSO) operations, supported by its stronger balance sheet amid increasing global oil and gas capital expenditure (capex) spending.

In a note on Tuesday, the research house said it expects BAB to deliver a record-high profit for the financial year ending Dec 31, 2024 (FY2024), driven by the full contribution of FPSO Sterling V and normalisation of FPSO Kraken operations.

“We see multiple rerating catalysts on the horizon, including i) FPSO Sterling V securing final acceptance and recognising full bareboat charter rates; ii) FPSO TGT-1 securing a seven-year charter extension; iii) both pipelay vessels securing new contracts; and iv) potential new FPSO contract wins.

“Key risks include any unforeseen operational delays in existing FPSO operations and securing final acceptance for Sterling V, and a sharp global oil price decline affecting global capex spending,” Phillip Capital said.

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