Quick take: Sapura Energy slips despite RM2.7bil contracts win


KUALA LUMPUR: Shares in Sapura Energy Bhd edged down in early commerce amid a weak broader market.

The oil and gasoline providers built-in oil and gasoline providers supplier declined 0.5 sen to 4.5 sen. It is at the moment essentially the most energetic counter with 141.54 million shares traded.

Sapura Energy’s drilling and engineering and development enterprise segments, via its wholly-owned subsidiaries and joint-venture, have secured six main contracts within the Asia-Pacific and Atlantic area with a mixed worth of RM2.7bil.

It mentioned RM176mil from the mixed worth was contributed by its joint-venture firm.

“While the combined values of said contracts are huge (RM2.7bil), we remain wary of this development as we highlight that in recent years, Sapura Energy has yet to display a satisfactory track record in regards to its job delivery and execution – in our view. With that, we are only cautiously positive on this development,” Hong Leong Investment Bank mentioned.

The analysis home added that the job wins will improve its present excellent orderbook to RM9.3bil (from RM6.6bil as at Jan 31, 2022).

“We think that it will be an uphill task for Sapura to turnaround its operations in the near-to-mid term due to heightened cost overruns in its projects and liquidity issues arising from difficulty to obtain funding due to its balance sheet distress as it is now officially a PN17 company.

“We maintain our ‘sell’ recommendation with an unchanged target price of RM0.01 – based on 0.5x FY22 P/B,” Hong Leong mentioned.

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