Investment Highlights

We maintain our BUY recommendation on Sapura Energy (Sapura) with unchanged forecasts and fair value of RM0.29/share, pegged to a 50% discount to the group’s FY21F book value.

Sapura has secured 7 different contracts worth RM1.9bil from multiple clients as follows:

• engineering, procurement, fabrication, transportation, installation and pre-commissioning services for 3 oil jackets for Saudi Aramco’s wellhead platforms in Zuluf, Ribyan and Abu Safah oilfields, off Saudi Arabia. This is part of the long term agreement programme, awarded back in October 2018, to provide such services over 6 years to Saudi Aramco. The works are expected to be completed by 1QCY22.
• engineering, procurement, construction and installation services for wellhead platforms and pipelines as well as removal of wellhead platforms in Thailand from Chevron Thailand Exploration and Production Ltd. The job is expected to be completed in 4QFY22.
• transportation and installation of 12”x10km of underwater pipeline offshore Sarawak for PTTEP Sarawak Oil Limited. This job, which falls under Petronas’ Pan Malaysia Transportation and Installation of Offshore Facilities (Year 2020), is scheduled for completion by May 2021.
• Sub-contracting works for the transportation and installation of the Wellhead Platform Jacket and Topside (Campaign 1) for Kasawari Gas Development Project by Heerema Marine Contractors. This covers project management, procurement and engineering works which includes reviewing of lift point design, design and supply of rigging, review of grouting system, pile grippers and installation aids. Completion is scheduled by 2QCY21.
• Marine site investigation and pipeline route survey services for Petronas Carigali’s Bestari Field, offshore Malaysia. The works are expected to be completed by Q2FY2022.
• Comprehensive maintenance of Baker Hughes-supplied turbomachinery equipment for Malaysia LNG Sdn Bhd under a 9.5 year service agreement, commencing in February this year.
• Charter extension of a firm period of 145 days for the semisubmersible tender assisted drilling rig, Sapura Pelaut, currently operating in Brunei, commencing April this year from Brunei Shell Petroleum Co. Sdn Bhd.

As a comparison, these contracts already account for 83% of the total jobs of RM2.2bil which were secured in 2020. Hence, we are positive that the group has made this first announcement in securing projects for the year, which could increase the group’s outstanding order by 6% from RM12.5bil currently, assuming a quarterly depletion of RM1.2bil.

Source: AmInvest Research - 11 Feb 2021