Sapura Energy may still see earnings weakness in coming quarters

KUALA LUMPUR: Sapura Energy Bhd, which posted its eight consecutive quarterly loss for second quarter ended July 31 (2Q20), could still see earnings weakness in the coming quarters.

CGS-CIMB Equities Research expects that the oil and gas company would not likely turn profitable for FY20.

“At last Friday’s analyst briefing, Sapura Energy said that it was not likely to turn profitable this financial year, so consensus expectations need to be lowered,” it said.

On a brighter note, Kenanga Research said a turnaround in financial year 2021 is possible.

Sapura Energy posted a net loss of Rm116.31mil in 2Q20, albeit 11% narrower than the previous year.

For the six-month period (1HFY20), the core net loss of Rm302mil was 7% wider yearon-year, while on a quarter-on-quarter basis, 2Q20 core net loss improved by 40% due to the Rm70mil non-recurring ESOS charge booked in 1Q20.

Without this, the quarterly losses were similar, noted CGS-CIMB Equities Research.

With the upcoming quarters expected to show weak numbers, most of the research houses are maintaining a ‘hold’ call with revised target prices.

Bloomberg data showed that 10 research houses have a ‘hold call’, while six are ‘buy’ with no sell calls.

Sapura Energy recently bagged three new contracts and two contract extensions worth Rm774mil, bringing its total contract wins to Rm3.1bil year-to-date.

The group’s order book, meanwhile, stands at Rm16.3bil.

Kenanga Research said it is positive on the new wins, which displayed the company’s continued job winning and delivering capabilities.

“Post-contract win, this would bring all nine of its operational rigs to have a contract on hand and be utilised by end of the year, as compared to currently only six being utilised. Meanwhile, seven other rigs remain stacked,” it said in its report.