UOBKH Research said that while Sapura Energy has secured more time for its restructuring, Ebitda recovery remains uncertain.
PETALING JAYA: UOB Kay Hian (UOBKH) Research is keeping its “sell” call on Sapura Energy Bhd
following the latter’s larger-than-expected core loss for the financial year 2024 (FY24).
The group’s earnings before interest, taxes, depreciation and amortisation (Ebitda) generation also fell short of target to be on track or meet its reset plans.
The research firm said while Sapura Energy had secured more time for its restructuring, Ebitda recovery remains uncertain.
Even if it does materialise, UOBKH Research reckons that the earliest Practice Note 17 upliftment of the stock can only be after January 2025.
On Monday, Sapura Energy reported a net loss of RM728.44mil for its fourth quarter ended Jan 31, 2024 (4Q24) after three profitable quarters.
This brought full-year losses to RM508.66mil from a loss of RM3.16bil in FY23, as a result of lower provision for impairment.
“Lacking details, we believe all segments contributed to the Ebitda setbacks, especially the rig division which contains the highest depreciation of RM0.3bil.
“Another negative surprise was the exploration segment, run by associate Sapura OMV, recording a pre-tax loss of RM182mil in 4Q24,” said UOBKH Research in a report.
Despite the low Ebitda, the group’s operating cash flow tripled year-on-year (y-o-y) to RM311mil.
“However, we think this is likely a result of another extension period of the restraining orders for the scheme of arrangement, which is unsustainable,” it added.
According to the research firm, Sapura Energy also benefited from repayment of advances from a Brazil joint venture amounting to RM471mil. Loans also continued to rise from RM10.6bil to RM10.9bil y-o-y.
“Although the group has an outstanding order book of RM5bil and a joint-venture order book of RM3bil, operating conditions remain tough amid rising inflation and industry costs.
“In addition, the group continued to face challenges in securing financing and working capital to execute contracts,” UOBKH Research said.
