KUALA LUMPUR: AmInvestment Research has downgraded its recommendation on SapuraKencana Petroleum (which is being renamed to Sapura Energy
) to Hold from Buy as the share price has risen to near its unchanged book value-based fair value of RM2.07 a share, currently based on a 20% discount on the group’s intangible assets.
It said on Friday its forecasts are unchanged as the new contracts have already been incorporated in its FY17F new order assumptions of RM7bil.
On Thursday, SapuraKencana announced it had secured five fresh Petronas contracts worth RM434mil (US$97mil).
“These awards further underpin the group’s earnings prospects as we estimate that these contracts will add 7% to the group’s new wins to date in FY17F to RM5.9bil – 84% of our FY17F order book addition of RM7bil.
“This has also raised the group’s order book by 2% to RM18.9bil currently. The group is hopeful for further wins with tender prospects worth over US$7bil (RM31bil),” it said.
AmInvestment Research said given the impairments provided by Bumi Armada and UMW Oil & Gas in the recent results announcements together with seasonally lower asset utilisation during the year-end monsoon season, it foresees a 4QFY17 loss from SapuraKencana, expected to be announced later this month.
Recall that the group registered a 9MFY17 net profit of RM381mil vs. consensus’ FY17 earnings of RM250milil and management’s guidance of RM100mil-RM200mil, which implies a 4QFY17 loss of RM131mil.
“The stock currently trades at a fair 8% discount to its latest quarterly reported book given the likelihood of 4QFY17 losses and asset impairments,” it said.
Limited time offer:
Just RM5 per month.
