PETALING JAYA: Oil and gas services provider Bumi Armada Bhd saw its share price come under pressure after it on Thursday announced second-quarter ended June 30 earnings that were lower than expected compared with a year ago due to higher finance costs and tax expenses.

However, OSK Research Sdn Bhd analyst Jason Yap has maintained the earnings forecast for Dec 31 financial year ending 2011 (FY11) and FY12 for now given that this was only the company’s first results release after listing.

He also said despite higher operating costs, and interest and tax expenses, forecasts were unchanged in view of the potential earnings surprises in the second-half of the year mainly arising from better utilisation of the company’s fleet.

“Our fair value for the stock is RM3.65 based on sum-of-parts valuation. Despite our neutral call, we continue to like the company for its ability to provide one-stop solutions starting from oil and gas exploration to the decommissioning stage,” Yap said in a report.

He pointed out that more than 70% of the company’s business provided recurring income and a constant cash flow vital especially during the currently difficult global operating environment.

ECM Libra Capital research head Bernard Ching said in another report that the second-half’s earnings would be helped along by the Sepat floating production storage and offloading (FPSO) vessel as well as improved performance from the vessel segment.

He noted that earnings recognition would commence from the two new FPSO projects secured this year and prospects beyond 2012 were still good with the company bidding for more FPSO projects.

“Based on our latest channel checks, Bumi was bidding for FPSOs in Malaysia, Indonesia and also Vietnam,” said Ching, who has made no changes to earnings estimates. But he has maintained a “hold” call on the stock as all positives have been priced-in at current valuations. “Our unchanged target price of RM3.91 is based on mid-FY12 price-earnings of 25 times which represents peak cycle valuation,” he added.

MIDF Research has also maintained a “neutral” call on the stock amid a cautious view over the market outlook and no immediate-term catalyst for the company.

The research firm has revised downward the FY11 earnings per share forecast on the company by 13% to 11.2 sen after incorporating the lower earnings before income and tax margin for FPSO business, higher finance costs and higher effective tax rate.

It has also raised the effective offshore supply vessel fleet utilisation rate assumption to 80% from 73% previously.