Bumi Armada.. say what you like, investors just love it!

Bumi Armada, as expected, made a fine debut today at its relisting and I really want to congratulate a dear friend of mine DMJ who made that massive capitalisation. Gosh! that was really cool . He got 98% of his IPO application! Real lucky. Armada trading under trading and services sector opened at RM3.65 and closed at RM 4.14, more than 35% of its IPO price of RM3.03.

DMJ cleared 30% of his position at RM4.10 this afternoon... so dinner at Tatu Coffee House Shangri-La resort is on his house, ( instead of on the house ).

The stock performed well despite the current worries on American default ( I really don't think America is that foolish to make that happen) and Eurozone debt. You can see that the New York stock market is really volatile as it is rather clueless on the resolution of those two issues. So I secretly thought that Armada would not have risen so fast. In fact when my remisier Jenny rang me up on the opening price, I told her to wait till it comes down to below RM3.60... that was a joke, by 11 am, Jenny came back and reported that  the price had gone up to RM3.92 and by that time my appetite for the stock had gone sour.

As I was watching Atlantis's historic final landing at 5.57pm this evening on my desktop, I  was also listening to CNN business news on my flatscreen and understood that sentiment had gone up again because of better reported companies' earnings and market went up yesterday and today it seems to have improved further. Could tomorrow, being a Friday be a day of  minor selling off for Armada?  Anything could happen over the weekend so some people might just take their profit and sleep well over the weekend.

Interesting to watch  guys, tomorrow I will go to the market again and offload the refunded ESA at whatever the Armada's price when I  note any sign of a minor profit taking... see I was not successful this time though I cannot really complain seeing that my MSM is doing quite well. My friend did not get MSM IPO so it is fair that now he is successful with Armada though I am rather envious at the number of shares that are allotted to him  because  my successful MSM IPO was only at 30% from the total number applied.

A Market analyst has put a target price of Armada at RM3.91 at 25x PE based on  earnings in 2011 and first quarter of 2012 but also with respect to other big cap O&G service providers' peak cycle P/E's but today's closing price beat the analyst's prediction. In fact I believe, on many occasions,  it is the investors who determine the price they are comfortable with and in some cases, not unhappy to lose.

Bumi Armada is a good counter based on its fundamentals,good governance and book orders but we must be aware of its potential  downsides affecting the stock price and possible dividends, for examples  the company is subject to risks such as the following:

• Cyclical O&G industry- growth decreases at end of cycle
• Project execution risks e,g cost overrun or delay with penalty imposition
• Unexpected vessel downtime- breakdown/repairs
• Forex losses due to weak USD ( as most earnings are in USD)

Okay people, you buy this stock at your own risk ( read the prospectus!)  as I am only trying to convince myself to buy this stock before the company  reaches its peak cycle for which it would be like Pchem or MHB  and for me it is part of the fun I derive from investing. Lose or gain is taken as a challenge in creating wealth. If you are going to fret over losing money in the stockmarket, go somewhere else to multiply your precious "ringgit".

Happy investing and good luck to the well-informed risk-takers.