MIDF Research noted that the group’s orderbook currently stood at RM16 billion, marking an inflection from FY18 low for the past four years.
KUCHING: Sapura Energy Bhd (Sapura Energy) was the most actively traded stock on Bursa Malaysia yesterday following news that the company had bagged nine new contracts worth RM1.8 billion.
At closing, the stock rose 7.5 per cent to 64.5 sen from Thursday’s close of 60 sen, with 198.25 million shares changing hands.
In a statement on Thursday, Sapura Energy said the new contracts brought the oil and gas services and solutions provider’s order book to RM4.5 billion. Tthe combined value represented a jump of nearly 250 per cent compared with that achieved in the corresponding February-June period last year.
MIDF Amanah Investment Bank Bhd (MIDF Research) noted that the group’s orderbook currently stood at RM16 billion, marking an inflection from FY18 low for the past four years.
Out of these, approximately RM5.6 billion and RM3.1 billion are expected to be recognised in CY18 and CY19 respectively. The company’s bidbook is at US$13 billion.
“Despite the massive reported losses largely stemming from the drilling rigs segment, there is unlikely to be impairments of such scale in the foreseeable future,” it said in a report yesterday.
“For FY19 in particular, we are expecting the group to return to the black. The chunk of the group earnings will stem from the upbeat offshore activity levels of the E&C segment and sustainably higher crude oil prices of the E&P segment.”
Year-to-date, MIDF Research saw that Sapura Energy’s share price declined by approximately 11 per cent despite stable crude oil prices in the tight range of US$70 per barrel.
“We are of the opinion that the current broad-market sell off presents trading opportunities for investors seeking exposure in oil and gas service providers with direct upstream exposure.
“Although we acknowledge that Sapura Energy’s profitability might still be weak due to its other underperforming segment, we believe that the share offers short term trading opportunities for investors.
“As such, we are maintaining our trading buy call on Sapura Energy with an unchanged target price of RM1.01 per share.”
In other points, RHB Research Institute Sdn Bhd upgraded Sapura Energy to a buy call with an unchanged target price (TP) of 82 sen, reflecting a 37 per cent upside after the company bagged the new contracts.
In a note yesterday, the research house said while the job win was neutral for its forecasted numbers – being within its order book replenishment assumption – it is a positive for the company, as it pointed to the recovery of the global offshore market.
“This takes the company’s year-to-date contracts won to RM4.2 billion at 52.5 per cent of our full-year assumption and we maintain our earnings estimates.
“The recent sell-down is unjustified, given the company’s significant exposure to overseas markets, and its huge upstream oil-producing asset potential in the long term,” it added.
Separately, Public Investment Bank Bhd retained its trading buy call on Sapura Enegrgy, with an unchanged sum-of-parts target price of RM1.11 per share.