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Sapura’s share price spiked on bail-out hope but what if it doesn’t happen?

Publish date: Mon, 23 May 2022, 05:58 PM

WHETHER confirmed or otherwise – or what the exact details entail – many investors/traders have jumped the gun by relishing the prospects of a Minister of Finance (Incorporated) (MoF Inc) bail-out of the financially-troubled Sapura Energy Bhd.

This morning, the global integrated oil & gas (O&G) shot up to an intra-day high of 10 sen before consolidating at 9 sen (up 2 sen or 28.57%) as the day’s most active stock, thus lifting its market capitalisation to RM1.44 bil.

The Edge Weekly in its May 23-29, 2022 issue has cited sources familiar with developments as saying that the intervention would be made under MoF Inc Act which empowered the finance minister to enter into business transactions for social and strategic purposes.

“From what I know, it is MoF Inc that will step up (lend a helping hand to Sapura Energy. What is discussed at present is some sort of assistance package. It could be a grant of some sort and it could be announced soon,” one source revealed.

It also said that finance minister Tengku Datuk Seri Zafrul Aziz has been working on the proposal for several weeks. However, the report said details on which government entity would spearhead the assistance were not yet available.

Among the 70 companies in the MOF Inc’s stable are Urusharta Jamaah Sdn Bhd which took over pilgrim fund Lembaga Tabung Haji’s assets; 1Malaysia Development Bhd (IMDB); SRC International Sdn Bhd; development financial institutions Bank Pembangunan Malaysia Bhd, Bank Pertanian Malaysia Bhd and Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank); rail transport operator Keretapi Tanah Melayu Bhd; UDA Holdings Bhd; sovereign wealth fund Khazanah Nasional Bhd; and national oil company Petroliam Nasional Bhd (PETRONAS).

Set against a backdrop of a gargantuan net loss of RM8.89 bil for its financial year ended Jan 31, 2022 – which is a Bursa Malaysia’s record high – bailing out the ailing counter would not be as easy as what former premier Datuk Seri Najib Razak has envisaged.

While PETRONAS has denied that it will take over Sapura Energy despite preliminary talks on the matter, this can also be a highly-explosive issue which the power that be has to thread carefully especially in the wake of the forthcoming 15th General Election (GE15).

As it is, any bailout attempt by the Government would surely be capitalised by the Opposition as a ‘racist’ or pro-Bumiputera rescue package vis-à-vis the 10.6 million Amanah Saham Bumiputera (ASB) investors and Permodalan Nasional Bhd (PNB) as Sapura Energy’s largest shareholder with a 39.6% stake.

Moreover, while no doubt Sapura employs more than 10,500 highly skilled locals, many belong to the Bumiputera community.

In fact, the very idea of getting PETRONAS to bailout the beleaguered Sapura Energy Bhd (as proposed by Najib) has been vehemently opposed by economist Nungsari Ahmad Radhi who believed that PETRONAS would be better off contributing to the National Trust Fund (KWAN) to secure the nation’s finances for future generations.

“You want PETRONAS to bail out its vendor? Rubbish. At the same time, they (the Government) want dividends from PETRONAS,” he pointed out. “Who knows, maybe they will get PETRONAS to pay for East Coast Rail Line (ECRL) later. Let us choke PETRONAS to death,”

While Sapura is poised to see ‘greener days’ ahead by having closed 2 sen or 28.57% higher at 9 sen at the close of today’s mid-day trading with 651.31 million shares traded (today’s most active stock), its ‘sparring partner’ Serba Dinamik Holdings Bhd back-pedalled 2.5 sen or 18.52% to 11 sen with 147.89 million shares exchanged hands (second most active stocks), thus valuing the company at RM410 mil. – May 23, 2022

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