The Star Online: Business
The Star Online: Business |
- Bumi Armada falls to lowest since February 2013
- Asian shares hit one-year high on Wall Street rally, Ukraine vote
- Asia shares mostly higher after Wall St record
| Bumi Armada falls to lowest since February 2013 Posted: 25 May 2014 07:44 PM PDT KUALA LUMPUR: Shares of Bumi Armada fell to a low of RM3.69 on Monday, the lowest since February 2013 as investors reacted to its weaker earnings and proposed rights issue to raise RM2.2bil. At 10.34am, it was down 20 sen to RM3.70. There were 1.75 million shares traded at prices ranging from RM3.69 to RM3.85. The FBM KLCI fell 1.15 points to 1,868.07. Turnover was 311.50 million shares valued at RM270.80mil. There were 251 gainers, 246 losers and 254 counters unchanged. Last Friday, Bumi Armada proposed a massive cash-call that could raise RM2.2bil and double its share base, as the offshore services firm prepares to spend RM6bil in capital expenditure over the next 12 to 18 months. The group also posted a 41% drop in first-quarter net profit to RM64.78mil from RM109.67mil a year earlier. Hong Leong Investment Bank Research (HLIB Research) said Bumi Armada's earnings fell 41% on-year and 27% on-quarter, making up 10% and 11% of its and consensus full-year estimates, respectively. It attributed it mainly due to change in earning recognition from operating leasing to finance leasing for its Kraken and C7 vessels coupled with lower activities in its T&I segment. "After the RM9.5bil contract award for Angola project, the total order book has increased to RM31.6bil. We understand the company has submitted 4 bids for FPSOs in Ghana, Nambia, Mexico and Indonesia with capex worth US$3bil. "In addition, the company is working on 6 more bids with a combined capex of more than US$10bil," it said. HLIB Research said given the robust outlook and number of projects to tender, Bumi Armada proposed one-for-two rights and one-for-two bonus issue exercises which are expected to raise about RM2.2bil and to be completed by the third quarter of 2014. "Gearing ratio will fall from 1.0 times to 0.7 times. Assuming right price of RM1.52 per share (35% discount to the theoretical ex-right price of RM2.33) FY15 EPS will be diluted by 33%. However, we believe the new FPSO projects will help to offset the dilution from the cash call," it said. The research house said it continued to like the company's prudent approach in tendering projects and outstanding execution capability. "Hence, we maintain our Buy call with target price reduced from RM4.87 to RM4.70 based on sum-of-parts valuation method (versus price-to-earnings method previously) following the earnings revision," it said. Hong Leong Investment Bank Research (HLIB Research) said Bumi Armada's earnings fell 41% on-year and 27% on-quarter, making up 10% and 11% of its and consensus full-year estimates, respectively. It attributed it mainly due to change in earning recognition from operating leasing to finance leasing for its Kraken and C7 vessels coupled with lower activities in its T&I segment. "After the RM9.5bil contract award for Angola project, the total order book has increased to RM31.6bil. We understand the company has submitted 4 bids for FPSOs in Ghana, Nambia, Mexico and Indonesia with capex worth US$3bil. "In addition, the company is working on 6 more bids with a combined capex of more than US$10bil," it said. HLIB Research said given the robust outlook and number of projects to tender, Bumi Armada proposed one-for-two rights and one-for-two bonus issue exercises which are expected to raise about RM2.2bil and to be completed by the third quarter of 2014. "Gearing ratio will fall from 1.0 times to 0.7 times. Assuming right price of RM1.52 per share (35% discount to the theoretical ex-right price of RM2.33) FY15 EPS will be diluted by 33%. However, we believe the new FPSO projects will help to offset the dilution from the cash call," it said. The research house said it continued to like the company's prudent approach in tendering projects and outstanding execution capability. "Hence, we maintain our Buy call with target price reduced from RM4.87 to RM4.70 based on sum-of-parts valuation method (versus price-to-earnings method previously) following the earnings revision," it said. |
| Asian shares hit one-year high on Wall Street rally, Ukraine vote Posted: 25 May 2014 07:43 PM PDT TOKYO: Asian shares hit one-year high on Monday thanks to a strong session on Wall Street and a decisive win for billionaire Petro Poroshenko in Ukraine's presidential election. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.15 percent while Japan's Nikkei share average gained 0.7 percent to hit one-month high. Investors took their cue from upbeat U.S. hosing data on Friday, with sales of new single-family homes rising more than expected in April and the number of houses on the market hitting a 3-1/2 year-high. The figures were good enough to boost Wall Street shares after Federal Reserve chief Janet Yellen said earlier this month that a slumping housing market, as well as geopolitical tensions, risked undermining the U.S. economy. The S&P 500 index <.SPX> closed at a record high of 1900.53 on Friday, just below a record intraday high of 1,902.17 set on May 13, buoyed by a rally in housing stocks. "Looking at housing shares, you could say markets had already lowered expectations on the housing markets sharply," said Tohru Yamamoto, chief strategist at Daiwa Securities. "Last month, investors were expecting a sharp rebound after a bad weather. But if you think housing is a downside risk, the figures look pretty good," he said. Investors were also hoping for easing geopolitical risks after exit polls in Ukraine gave Poroshenko, a confectionery magnate with long experience in government, more than 55 percent of the vote in the presidential election. Results will not be announced until later on Monday but runner-up Yulia Tymoshenko, on 13 percent, made clear she would concede, sparing the country a tense three weeks until a runoff round would have been held. "Poroshenko's victory in the first round of vote is positive for political stability, even though there remains a huge uncertainty and we need to keep an eye on further developments," said Junya Tanase, chief currency strategist at JPMorgan Chase Bank in Tokyo. Market holidays in London and New York on Monday may curb activity in Asia. The improved mood put pressure on the safe-haven yen, which fetched 101.97 yen to the dollar in early trade, near its lowest level in more than a week. The euro faced pressures of its own, holding near a three-month low of $1.3615, not helped by a rise in votes for anti-establishment parties in the European Parliament elections, especially in France and Greece. In France, the far right National Front scored a stunning victory, forcing French Prime Minister Manuel Valls to call the breakthrough by the anti-immigration, anti-euro party "an earthquake" for France and Europe. Greece's radical leftist Syriza also rode a wave of anti-austerity anger to win the country's EU election, though it failed to deliver a knockout blow against Prime Minister Antonis Samaras's government, the official projection showed on Sunday. "We have to pay attention to how periphery euro bonds will react to the election results. Because their spreads have been tightening sharply over the past year, there could be some correction, in which case the euro could face further pressure," said JPMorgan's Tanase. The common currency has fallen 1.7 percent so far this month, pressured by European Central Bank President Mario Draghi's suggestion earlier this month that the bank will adopt stimulus at its next policy meeting in June. Disappointing German business sentiment data on Friday reinforced expectations of an imminent ECB policy easing.- Reuters |
| Asia shares mostly higher after Wall St record Posted: 25 May 2014 07:39 PM PDT HONG KONG: Asian markets mostly rose Monday following a record close on Wall Street that was fuelled by upbeat US data, while Tokyo was boosted by a weaker yen. Tokyo rose 0.67%, Hong Kong gained 0.39%, Sydney added 0.26%, Shanghai was 0.37% higher while Seoul slipped 0.18%. The gains added to last week's broad advances that came after a sharp improvement in Chinese manufacturing activity and positive comments about interest rates from the US Federal Reserve. US shares rallied on Friday after the Commerce Department said new single-family homes were sold at an annual rate of 433,000 units in April, well above analysts' forecast of 415,000. The news added to a growing sense that the world's biggest economy is well on the recovery track. The S&P 500 advanced 0.42% to 1,900.53, ending above the 1,900 barrier for the first time. The Dow rose 0.38% and the Nasdaq gained 0.76% in quiet trade as investors wound down for the Memorial Day holiday weekend. Market-watchers will be keeping an eye on the release later in the week of key US data, including gross domestic product growth and housing figures. On currency markets the dollar benefited from rising confidence in the global economy, making fresh inroads against the yen. The greenback bought 101.98 yen in the morning, against 101.92 yen in New York and well up from 101.72 yen earlier Friday in Tokyo. The euro stood at US$1.3617 and 138.85 yen, from US$1.3632 and 138.91 in New York on Friday. Oil prices edged lower after Ukraine's presidential election passed off without major incident and saw a victory for the pro-Western candidate. Chocolate baron Petro Poroshenko won outright and immediately vowed to end a bloody pro-Russian uprising that has tipped the country towards civil war. On Friday, Russian President Vladimir Putin said he would respect the outcome of the election. On oil markets, the US benchmark, West Texas Intermediate for delivery in July, fell 26 cents to US$104.09 per barrel in early Asian trading. Brent North Sea crude for July delivery dropped 24 cents to US$110.30. Crude prices have been rising in tandem with the events in Ukraine as the country is a major conduit for Russian oil and gas exports to Europe, and any escalation of the conflict could disrupt supplies and send prices soaring. Gold fetched US$1,293.88 an ounce at 0210 GMT compared with US$1,291.65 late Friday. – AFP |
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