PETALING JAYA: Offshore energy facilities and services provider Bumi Armada Bhd’s improving balance sheet and lower net gearing provides the company the buffer to bid for floating production, storage and offloading (FPSO) jobs as well as stable cash for ongoing operations.
Analysts maintained a positive view of its outlook despite the company reporting results for the financial year ended Dec 31, 2025 (FY25) that was below expectations.
It declared an interim dividend of one sen per share.
Kenanga Research, which has maintained an “outperform” call on the stock with a reduced target price (TP) of 41 sen from 45 sen, said while there were no near-term catalysts, the company has optionality to bid for Indonesian production sharing contracts.
“That aside, its balance sheet is also expected to be in slight net cash position by FY27 assuming there are no major job wins,” the research house said, noting that the called-off merger with MISC Bhd, a maritime logistics outfit, removes access to a stronger balance sheet for FPSO expansion.
It has also cut FY26 earnings by 14% after accounting for lower charter revenue from the company’s FPSO Olembendo, which also saw weaker-than-expected revenue contribution in FY25.
Hong Leong Investment Bank (HLIB) Research has maintained a “buy” call on the stock but has also lowered the TP to 43 sen from 49 sen, pointing to the current share price’s undemanding 3.7 times FY26 earnings supported by stable recurring income from long-term FPSO contracts insulated by oil price volatility.
It said the company’s net gearing has improved to 0.18 times in FY25 compared to 0.37 times in FY24.
“Cash balance remained stable at the circa RM1.3bil level, providing adequate liquidity for ongoing operations and potential participation in upcoming FPSO bids,” it said.
“With its focus on securing one to two FPSO contracts, we believe Bumi Armada’s wide valuation discount could narrow upon successful tender wins and subsequent earnings growth,” it added.
Shares of Bumi Armada traded at 34 sen at last look.