What’s New

Sapura Energy secured 5 contracts with a combined valued of RM905m namely:

• Provision of Engineering, Procurement, Construction and Commissioning (EPCC) of Kinarut ERB West Compressor Upgrading Project for Petronas Carigali for 3 years expiring in 4Q 2020.

• Provision of Minor Engineering, Procurement, Construction and Commissioning (ePCC) for Bokor Betty Brownfield & Rejuvenation for Petronas Carigali for 4 and a half years expiring in 2Q 2020.

• Provision of Procurement, Construction, Commissioning Plus Installation (EPCC+!) for FFD Phase 2 Facilities at North Malay Basin by Hess Exploration and Production Malaysia BV, expected to complete by March 2020.

• Provision of Transport and Installation (T&I) Works for Bokor CPP Project by Malaysia Marine and Heavy Engineering Sdn Bhd, also expected to complete by March 2020.

• Provision of Offshore/Onshore Pipeline and Terminal Works for Fifth Oil Berth Project by Mumbai Port Trust, expected to complete by May 2019.

Comment

• Orderbook – After bagging the above contracts worth RM905m, orderbook is estimated to decline to around RM14b from RM15.1bn in 3QFY18 as RM1.7b is expected to be booked in 4QFY18.

Earnings Outlook

• Earnings forecast maintained – We are keeping our EPS forecasts for FY18 and FY19 as the contract wins are within expectation.

• Risk – The group faces challenges in replenishing its orderbook amid tough operating environment despite recent gains in oil prices.

Valuation & Recommendation

• We are upgrading our recommendation to BUY with an unchanged target price of RM1.06 (based on 0.5x P/B ratio) as we see its value re-emerges following recent slump in share price. With oil prices rebounded and stabilising, earnings from

its Exploration & Production division is expected to improve significantly.

Source: JF Apex Securities Research - 6 Feb 2018