Sapura Energy slumps to fresh low of 47.5 sen

KUALA LUMPUR: Oil and gas services company Sapura Energy Bhd fell to a new record low of 47.5 sen on Friday as investors stayed cautious about its outlook and a research slashed the target price to 40 sen.

At midday, it was down three sen to 48 sen with 57.8 million shares done at prices ranging from 47.5 sen to 51.5 sen.

Year-to-date, it is down 23 sen or 32.4%. Its 52 week high was RM2.10 on April 11, 2017.

The FBM KLCI rose 2.87 points or 0.16% to 1,842.49. Turnover was 1.19 billion shares valued at RM787.10mil. There were 300 gainers, 304 losers and 560 counters unchanged.

Affin Hwang Capital Research maintained its sell call on Sapura Energy Bhd  with a lower target price of 40 sen from 73 sen previously based on 0.6 times FY19E net tangible assets. 

The downside risks to the counter remain from potantial impairment, negative earnings surprises, uncertainty over orderbook replenishment, weak cashfows and the potential listing of its exploration and production (E&P) division, it said.

While the listing of the E&P business is positive in the long run, Affin Hwang Research noted that the "leftover" Sapura Energy would lose its appeal to many existing investors.

"Although still at an early stage, any move towards carving out the E&P division entirely for a separate listing, may therefore not be value accretive to the currently listed Sapura Energy."

The outlook of Sapura Energy's E&C and drilling division have been on an earnings decline.

"While oil price has been trending upwards, oil majors’ capex remains lacklustre. As such, we believe that order book replenishment risks will continue to be investors’ main concern," said the research firm.

Earlier, Maybank Investment Bank Research had a Buy with a target price (TP) of RM1.20 while AmInvestment Research has a hold with a TP of RM1.54.

TA Research a Buy and TP of RM1.25 while UOB Kay Hian Malaysia Research has a Sell and TP of 55 sen.