AmInvestment Research estimates Sapura Energy group’s outstanding order book could increase by 10% to RM13bil based on the group’s bids of RM53bil currently.

In a research note on Thursday, the RM53bil would be 4.1 times its current order book. Additionally, the group is looking for prospective projects worth up to RM93bil.

“Recall that Sapura’s 1QFY22 normalised loss of RM49mil (excluding RM48mil one-off items for unamortised borrowing costs and de-designation of hedging instruments) could have turned around to a net profit of RM35mil,” it said.

This was after the removal of forex losses of RM43mil and Covid-19-related costs of RM42mil from quarantine, tests and productivity losses, it said.

AmInvest Research said additionally, all four core operations were profitable in 1QFY22 with the drilling division rebounding to a pretax profit of RM22mil with only seven rigs in operation.

Against the backdrop of improving prospects for new jobs across the globe, better cost structure and underpinned by a revitalised RM10bil debt structure amid more optimistic crude oil prices, the stock currently trades at an undeserved fire-sale 0.2 times price-to-book value for an integrated oil & gas operator with an established regional footprint and proven delivery record.

The research house reiterated its buy recommendation on Sapura Energy with an unchanged fair value of 29 sen a share, pegged to a 50% discount to its FY21F book value. This valuation reflects a neutral ESG rating of three stars.

“Our forecasts, which are higher than consensus, are maintained as Sapura’s new contracts worth RM1.2bil to provide engineering & construction (E&C), operations & maintenance (O&M) and drilling services are in line with its FY22F fresh order book assumption of RM6bil,” it said.