Saturday, 3 December 2016
Bumi Armada investors ponder over group losses
INVESTORS are at a decision-making crossroads with respect to Bumi Armada Bhd’s performance and are wondering if losses could mount further or if this could indeed by the end of the worst for the group.
The group had recently announced a third quarter loss which had considerably widened by some 238% from a net profit position of RM70mil in the same quarter a year ago with revenue having declined by some 33%.
Bumi Armada’s year to date (YTD) performance have also been dismal with it going deeper into the red as YTD net losses almost quadrupled to RM591.6mil.
The development after Bumi Armada released its earnings saw investors selling down its shares and mostly ignoring two upgrades to ratings which were issued by two research houses after Bumi Armada’s quarterly results were announced.
Bumi Armada had surprisingly received two upgrades from analysts after its recent results were announced.
RHB Research and JF Apex Securities both upgraded the stock to a “neutral” and buy respectively.
Interestingly, sentiment in the international offshore oil field services provider have not recovered in line with oil prices.
It continues to tank and is presently hovering near its historical lows of 50 sen.
Bumi Armada did get a little respite though, from Opec’s decision to cut output last week and its shares have recovered slightly after tanking in the beginning of last week.
Also to note that while fundamentals of the sector as a whole may not have caught up with the recovery in oil prices, some analysts have started to recommend Bumi Armada to their clients.
Other analysts were not so sure though as it is still unclear if Bumi Armada would indeed start to see an improvement in its earnings in the near term and also questioned if the whole business model of offshore oil processing was really viable at this point in time.