Quick take: Sapura Energy climbs on RM1.2bil contracts win

KUALA LUMPUR: Shares in Sapura Energy Bhd climbed in early trade Thursday after securing contracts worth RM1.2bil.

The oil and gas service provider rose 4%, or 0.5 sen to 13 sen with over eight million shares traded.

Sapura Energy has secured major contract wins and extensions worth RM1.2bil in Malaysia and Thailand for its engineering and construction (E&C), operations and maintenance (O&M) and drilling segments.

For its E&C segment, its unit Sapura Offshore Sdn Bhd secured contracts from PTTEP Sarawak Oil Limited (PTTEP) and EnQuest Petroleum Production Malaysia Ltd (EnQuest) under the Pan Malaysia Transportation and Installation of Offshore Facilities 2021 campaign.

For its O&M segment, its subsidiary Sapura Fabrication Sdn Bhd secured contracts from EnQuest, as well as Sarawak Shell Bhd and Sabah Shell Petroleum Company Limited.

For its drilling segment, Sapura Drilling Asia Sdn Bhd has been awarded two contracts from Petronas Carigali Sdn Bhd for its drilling activities offshore Malaysia.

The award of the first contract is for the provision of tender-assist drilling rig services for a duration of two years with an option of a two-year extension commencing April 26, 2021 to April 25, 2023.

AmInvestment Bank Research has reiterated its “buy” recommendation on Sapura Energy with an unchanged fair value of 29 sen per share, pegged to a 50% discount to its FY21F book value. This valuation reflects a neutral ESG rating of 3 stars.

“Our forecasts, which are higher than consensus, are maintained as Sapura’s new contracts worth RM1.2bil to provide E&C, O&M and drilling services are in line with its FY22F fresh order book assumption of RM6bil,” it said.

“We estimate that the group’s outstanding order book could increase by 10% to RM13bil, which may rise further from the group’s bids of RM53bil currently – 4.1x its current order book. Additionally, the group is looking for prospective projects worth up to RM93bil,” it added.

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