KUALA LUMPUR, July 2 — Sapura Energy Bhd’s shares were the most actively traded in the morning session today after posting a net loss of RM136.54 million in the first quarter of financial year 2019.
At 12.30pm, Sapura Energy eased one sen to 63 sen with 59 million shares changing hands.
RHB Research Institute in a research note today said Sapura Energy’s core losses widened, mainly on significantly lower earnings for the engineering and construction (E&C) division.
“This was on lower work orders executed, as well as losses from the drilling wing on a lower number of rigs operating during the quarter,” it said
Sequentially, it said losses also widened on higher finance costs and lower contributions from the energy business.
MIDF Amanah Investment Bank in a separate note said there were no impairments made in the quarter as previously guided.
“Therefore, for financial year 2019 forecast in particular, we are expecting the group to return to the black,” it said.
It added that the chunk of the company’s earnings would stem from the upbeat offshore activity levels of the E&C segment and sustainably higher crude oil prices of the exploration and production (E&P) segment.
Public Investment Bank in another note said Sapura Energy’s orderbook remained solid at RM16.7 billion with the company recently securing a string of contracts across the upstream value chain in four different countries — Malaysia, Australia, India and Mexico, with a combined value of RM1.8 billion.
“Altogether, Sapura has successfully secured a total of RM4.5 billion worth of contracts thus far, accounting for 75 per cent of our financial year 2019 orderbook replenishment target, pushing its balance order book in hand to RM16.7 billion, which will keep them busy over the next three years,” it said.
Kenanga Investment Bank said it is optimistic on Sapura energy’s ability to achieve its replenishment target backed by tenders worth US$13 billion (US$1=RM4.03) and expects E&C contributions to increase as contract works advance.
“As for its loss-making drilling division, we are anticipating a gradual recovery with rig utilisations to be higher through the recent two awards secured in 2Q18 for Sapura Esperenza and Sapura Berani,” it said.
The investment bank is also positive on Sapura Energy’s entry into Mexico’s Block 30 with the recent production sharing contract signing and farm-in agreements into five offshore exploration permits in New Zealand which would provide new growth opportunities for the business in the long term.
MIDF Amanah and Public Investment Bank have maintained a “Trading Buy” view on Sapura Energy with the target price set at RM1.01 and 81 sen respectively.
RHB Research has retained a “Buy” call and target price of 82 sen on Sapura Energy, while Kenanga Investment has kept an “Outperform” view on Sapura Energy with the target price at 77 sen. — Bernama
