Bumi Armada Bhd has made significant strides in its environmental, social, and governance (ESG) practices, resulting in an upgrade to its ESG score and a higher target price from RHB Investment Bank Bhd (RHB Research). The research house has maintained its BUY call on the company, raising its target price to RM0.73 from RM0.70, reflecting a 36% upside from the current market price of RM0.54 (US$0.12). This increase in target price comes after Bumi Armada's substantial progress in emissions tracking and its commitment to achieving net zero by 2050.
RHB Research highlighted that Bumi Armada's dedication to monitoring and reducing its greenhouse gas (GHG) emissions has set the company apart in the energy sector. The company's alignment with GHG protocol classifications and its focus on Scope 1 and 2 emissions reporting have provided a clearer picture of its environmental impact. Notably, the company has made progress in its waste management practices, while its overall emissions have seen a decline.
However, despite this progress, Bumi Armada's FPSO (Floating Production Storage and Offloading) operations still reported a slightly above-average Scope 3 emission level of 128.7 tCO2e per thousand tonnes of production, which exceeded the 2022 baseline set by the International Association of Oil & Gas Producers (IOGP). RHB Research noted that Bumi Armada is actively addressing these emissions by working with clients to identify Scope 3 reduction opportunities.
The research house commended Bumi Armada for its strong commitment to sustainability, but also emphasised areas for improvement, such as more frequent and transparent reporting on its low-carbon and renewable energy initiatives. By setting clear medium-term goals, the company can enhance investor confidence and strengthen its alignment with global ESG standards.
RHB Research's optimistic outlook on Bumi Armada reflects the company's efforts to become a more sustainable player in the energy sector, while also positioning itself for long-term growth.
