Sapura Energy has room for improvement in FY19 – DBS Research

Sapura Energy Bhd has room for improvement in its financial year ending Jan 31, 2019 (FY19) despite the challenging operating environment, particularly in the engineering and construction segment, said DBS Group Research.

It said the company’s orderbook which stood at RM15.1 billion as at Oct 31, 2017, would provide earnings visibility until FY20.

“We note that current tender book amounts to US$5 billion, with another US$4.5 billion prospective jobs awaiting tender. However, we foresee the drilling segment to continue incurring losses with only six out of 15 rigs to be operational in FY19.”

“Following a disappointing results in the third quarter (Q3) ended Oct 31, 2017, we have cut our FY18 earnings forecast by assuming a full-year loss of RM194 million, which factors in losses for the drilling segment,” said DBS Group Research in a note today.

Sapura Energy recorded a pre-tax loss of RM209.7 million in Q3 compared with a pre-tax profit of RM199.25 million registered a year ago, while revenue also slipped to RM1.27 billion from RM2.22 billion previously.

The group’s financial performance was in line with the lower revenue accrued from its engineering, construction and drilling business segments and the lower contribution from its share of profit from joint-ventures due to the loss on the disposal of its vessel by Sapura Acergy amounting to RM46.1 million.