PETALING JAYA: Vantris Energy Bhd is set for a stronger earnings trajectory as higher drilling utilisation and recent contract wins support its order book and free cash flow generation.
Its improving operational performance, alongside resilient contributions from its Brazil joint venture (JV), should provide further support to the group’s turnaround.
BIMB Research maintained its “buy” call on Vantris with a target price of 72 sen, saying the stock’s valuation does not fully reflect its improving financial position and earnings recovery.
The research house said the group’s order book had risen to RM7bil from RM5.9bil in the first quarter of the financial year ending Jan 31, 2027 (1Q27), supported by recent contract wins.
“We expect earnings to remain resilient, anchored by consistent contributions from the Brazil JV,” BIMB Research said.
Further recovery is expected from higher drilling utilisation as Sapura Jaya, Sapura Alliance and Sapura Pelaut resume operations, while recent transportation and installation contract wins should strengthen engineering and construction (E&C) contributions.
“Collectively, these should support stronger earnings and cash-flow generation,” it said.
BIMB Research raised its financial year 2027 (FY27) to FY29 earnings forecasts for Vantris by 10% to 14% following an upward revision to its margin assumptions, reflecting stronger-than-expected profitability in the first half of FY27 (1H27).
Vantris recorded 2Q27 core profit after tax and minority interest (Patami) of RM141mil, excluding RM66mil in foreign exchange losses.
The improvement on a quarter-on-quarter basis was driven by higher revenue contributions from its operations and maintenance and E&C segments.
Its 1H27 core Patami stood at RM197mil, compared with a core loss of RM457mil in 1H26, coming in at about 70% of BIMB Research’s full-year expectations.
The Brazil JV remained the main earnings driver, contributing RM123mil in 2Q27, up from RM115mil in 1Q27.
Drilling, however, remained a drag, posting a pretax loss of RM9.6mil as Sapura Jaya and Sapura Alliance were between contracts during the quarter.
Both rigs have since resumed operations, which BIMB Research expects to drive a recovery in the segment from 3Q27.
Operating cash flow remained negative at RM94.5mil in 1H27, mainly due to cash outflows for legacy Angola projects and payments under its creditor restructuring scheme. Management expects operating cash flow to normalise in FY28 after these legacy payments are completed.
BIMB Research said Vantris was trading at just 0.3 times FY27 price-to-book value.
“We believe Vantris Energy’s turnaround remains underappreciated,” it said, adding that the stock was trading close to its dilution-adjusted pre-Practice Note 17 level of about 32 sen despite having a significantly healthier financial position.
