Affin Cuts Bumi Armada To Reduce, Lowers Target

Affin Investment Bank cuts Bumi Armada (5210.KU) to Reduce from Add following weaker-than-expected 9M11 results, which accounted for only 60% of the house's FY11 forecast.

 "We had expected a shorter duration for the DLB Armada Installer's maintenance and upgrading work and underestimated the earnings impact of its absence," the house says. 

The house cuts its FY11 earnings forecasts by 22% after inputing a lower earnings contribution from the transportation and installation business. It cuts FY12-FY13 forecasts by 7%-9% "on more conservative new contract wins assumptions in view of the rising global economic uncertainties." 

The house cuts its target to MYR3.45 from MYR3.78 in tandem based on an unchanged 20X FY12 P/E.

 It recommends "investors to trim exposure at current share price and accumulate on price weakness in the event of a sentiment driven selloff in share price." It tips the winning of additional FPSOs and/or other major O&G contracts as key re-rating catalysts. Its shares are down 0.5% at MYR3.95.