Sapura Energy set for gradual recovery

Despite the uneven economic recovery due to Covid-19, MIDF Research said the improving Brent crude oil price bodes a promising rebound for the group.

KUALA LUMPUR: Sapura Energy Bhd, which posted a net loss of RM97mil for three-month ended April 30 (Q1FY22), is expected to see its earnings improve in the coming quarter supported by the positive global crude oil price outlook, RM11.8bil order book and potential contract wins.

Despite the uneven economic recovery due to Covid-19, MIDF Research said the improving Brent crude oil price bodes a promising rebound for the group.

“The higher oil price will aid the exploration and production segment, but with limited impacts on the short-term due to the development phase of projects.

“Sapura Energy will focus on its engineering and construction segment to create a space for growth, considering the growing prospects and leads in the pipeline, ” it said in a note to clients.

The research house pointed out that Sapura Energy’s “bid funnel remains strong” going by its current order book, which stood at RM11.8bil.

It noted that to date, the group has total bids and prospects valued at RM147bil, with RM54bil worth of tenders submitted or are in progress.

Meanwhile, Kenanga Research said that Sapura Energy’s (Q1FY22) core loss had narrowed sequentially to RM60mil, which is deemed as above expectations – helped by higher projects progression, drilling rig utilisation and oil prices.

Nonetheless, it added that the quarter was still partially dragged by a non-recurring refinancing cost and other pandemic-related impacts.

“We are hopeful that upcoming quarters could produce better numbers, especially in the second half of its FY22, backed by recognition of the group’s order-book of RM11.8bil, with RM29bil worth of bids already submitted globally, ” it said.

It added that the successful refinancing of about RM3bil in short-term debt being reclassified as long-term has significantly reduced the group’s immediate borrowings risk.

Over the longer-term, the group is aiming to have a sizable exposure towards energy transition by the year 2026, it said.

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