KUALA LUMPUR, April 28 ― Research firms have remained positive on Sapura Energy Bhd after it substantially narrowed its net loss in the financial year ended January 31, 2021 (FY2021).
Kenanga Investment Bank Bhd said Sapura Energy’s FY2021 narrowed loss came in below expectations amid project disruptions, Covid-19-related additional costs, and monsoon season impact.
“Despite recording lower revenue due to the pandemic, the group still managed to reduce core net loss on cost optimisation efforts,” it said.
Hence, it maintains “outperform” with unchanged TP of 21 sen, premised on the long-term fruition of the group’s corporate and financial restructuring efforts.
Sapura Energy had, yesterday, announced its net loss of RM160.87 million in the financial year ended Jan 31, 2021 (FY2021) from a RM4.56 billion loss in the preceding year, while revenue fell 17.1 per cent to RM5.35 billion from RM6.45 billion a year before.
Furthermore, MIDF Research said it continues to view Sapura Energy Bhd’s future prospects positively, given that operating environment worldwide has improved since mid-2020, underpinned by higher oil prices which have rebounded significantly to US$60 per barrel levels which will benefit engineering and construction (E&C), as well as the exploration and production (E&C) segments.
The research house said Sapura Energy is well positioned to potentially win more contracts, given its width and depth of expertise in providing various oil and gas-related services.
“Inclusive of the latest award of contracts totalling approximately RM1 billion, Sapura Energy orderbook currently stands at RM13.7 billion with a cumulative contract wins of RM5 billion year-to-date,” it said.
Therefore, MIDF has maintained its Buy recommendation on Sapura Energy with unchanged target price (TP) at 16 sen.
Furthermore, CGS CIMB said it expects Sapura Energy core net loss to narrow year-on-year (y-o-y) this year, as its existing order book implies RM5.3 billion in revenue recognition for FY2022 forecast, which already matches FY21’s revenue base; additional jobs from its RM31.5 billion in submitted bids could lift revenue further.
“Sapura Energy is trying to recoup RM286 million in Covid-19 related costs incurred in FY2020 from its customers via variation order claims, which may contribute to FY2022 forecast,” it said.
CGS CIMB has upgraded its recommendation to “hold” from “reduce” and increased the TP from 4.5 sen to 14.5 sen, mainly on the back of a lower discounted present value of Sapura Energy borrowings.
Meanwhile, Public Investment Bank Bhd foresees that Sapura Energy’s profit margin will remain volatile.
“This has been reflected in its latest financial results whereby the group failed to maintain the profitability recorded in first half FY2021,” it said, while maintaining its earning forecast and trading sell rating with an unchanged TP of 10 sen. ― Bernama
Source: Malay Mail
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