SAPURA ENERGY BHD

By MIDF Research Neutral Target price: RM1.71

MIDF Research believes that Sapura Energy will be able to weather the tough operating environment while seeking more opportunities with its current cash hoard of around RM3.5bil, net gearing level of around 1.15 times and potential remaining cash injection of about US$63mil from the cessation of the Berantai RSC by June 2017.

The research house has maintained its “neutral” call on the counter with an unchanged target price of RM1.71 per share.

The group announced a slew of jobs from the engineering and construction segment, worth a total of US$206mil (RM879mil). The jobs secured include sub-contracting works.

The first among the four contracts announced is for the engineering, procurement, construction and installation of wellhead platforms, associated pipelines and tieins for the Zawtika Development Project Phase IC.

The second award of contract is for the Seria Crude Oil Terminal Oil Export System upgrade offshore single-point mooring replacement by Brunei Shell Petroleum Co.

The contract duration is about 21 months commencing April 2018.

The third job is for the transportation and installation balance sub-sea works for Oil and Natural Gas Corp Ltd, with the offshore works expected to be completed by second quarter of 2017.

The fourth contract announced is for the provision of inspection, repair and maintenance for PTTEP Australasia (Ashmore Cartier) Pty Ltd.

About RM6.4bil worth of jobs have been secured for the year-to-date and RM1.2bil for FY18. The group’s current total orderbook stands at over RM16bil (after excluding Berantai RSC’s portion).

It is expected that about RM5.5bil of the orderbook will be recognised in FY18 and the remaining RM11.2bil in FY19 and beyond.