accumulate on dips.

I'm not sure why the SC rejected the E&P listing in the first place, but possibly because the valuation of RM7-10bn is higher than Sapura's market cap, and spinning out a substantial asset like that would mean more threshold to be met.

Since then, my observation is that Sapura's Management has showered the market with a slew of good news, particularly on the E&P side, possibly with the intention to boost Sapura's share price to meet any regulatory hurdles to list the E&P assets. I would expect Sapura to continue to do so, given it's significantly larger tenderbook this year, which means higher chances for more contract awards.

Spinning out the E&P does not mean that the mothership sapura energy will have no value after that. This is a misconception. It is likely that Sapura will sell only 20-30% of its ownership of the E&P assets for cash so that it can ensure debt obligations and or any capex meets are met for the next 5 years. The rest of the 70% will be held on Sapura's books, and the value remains. This is an excellent, proactive monetization strategy to strengthen the company's balance sheet and create value for shareholders.

buy on dips. bonus returns.

buy on any dips from profit taking or contra forced selling.
hold on to it, a lot more runway for the share price to grow.
it's still incredibly cheap, especially across 6-12 months investment horizon.

hold it, a lot more runway for growth.

the syria strike uncertainty is now over.

trade war is easing.

oil price stays above US$70.

sapura has doubled its tenderbook, and by virtue of it being one of the largest integrated O&G players - it'll be the first in line to benefit from higher capex from oil majors. Expect more contract awards announcements to come.

hold with patience. the share price has a lot more runway to grow from being oversold earlier.

hold it. the share price is still terribly cheap.

the company is in a much better position than it is compared to one year ago, and yet it's only priced at 1/3 the price today.

good time to buy on dips.

hold it. more runway to grow.

maintain hold.
need patience to make big $.
more runway to go up.

1) Trump considers rejoining TPP
2) US-China trade war eases
3) Syria war eases (double edged sword - better market sentiment, but some impact on oil price)

So far, haven't seen any significant headwinds to the stock, except profit taking by investors who anchors the 0.40 price to where it is today, viewing it as expensive.

In fact, the 3 factors above should combine and support a gradual climb, until further newsflow (new contracts won etc.).

this is a good dip to enter.

accumulate on dips below 0.7

http://www.cityam.com/283837/may-convenes-war-cabinet-syria-airstrikes-loom

Theresa May convenes war Cabinet as Syria airstrikes loom after weekend's chemical attack

https://www.nytimes.com/2018/04/11/world/middleeast/trump-syria-attack.html

Trump Promises Strike on Syria and Warns Russia Against Backing Assad

The suspense will keep oil price elevated above US$70.
If the strike happens:

1) Global market sentiment will be affected, but
2) Gold, oil price and O&G related stocks will do relatively well.

hold it and accumulate on dips.
In 6-12 months time, RM1 is more likely than RM0.40.
Just my guess.

Hong Leong:

Delivery. First gas delivery for phase 1 of SK408 is targeted for 1QCY20.

Capex. We understand that total required capex for phase 1 (adjusted for Sapura’s effective interest) is about US$200m over the next 3 years.

Reserves. To recap, 6.5 trillion cubic feet of known gas reserves have been discovered for SK408 and this brings total known gas reserves for Sapura to 9 trillion cubic feet.

Forecast. Maintain forecast as earnings contribution is expected to kick in earliest by FY21 which is beyond our forecast horizon. Based on our estimation, EBITDA contribution from this project in the first year is in the range of RM350-400m. This represents potential 24-27% additional contribution on top of FY18 EBITDA level.

JF Apex Securities:

Silver lining. Given the recent lacklustre performance
in its Engineering & Construction (E&C) and Drilling
divisions, the Exploration & Production (E&P) arm is
seen as the bright spot of the company.

The latest development came after recent successes in
securing exploration blocks in Mexico and New Zealand.

Currently, the development of SK310 B15 field has
completed and has just started contributing to earnings.
Going forward, gas from SK408 will come on stream in
late CY2019 and could lift production volume to 12
mmboe from 4 mmboe currently. We have yet to
include potential earnings contribution into our forecast
with first gas expected in end-2019. Its net reserve
stands at 253 mmboe (95% gas, 5% oil) that could last
for over a decade.

TA Securities:

We believe the timing of this project hits a sweet spot, as it capitalizes on
the current low cost environment in upstream development. Meanwhile,
fast forward 2 years later, this project will benefit from the recovery in oil
price.

Furthermore, SAPE’s Engineering & Construction (E&C) fleet is currently
underutilized. Therefore, development of Phase 1 SK408 may provide
working opportunities to boost SAPE’s E&C orderbook.

We are positive on SAPE’s active momentum in the upstream E&P
(Exploration & Production) space in recent months, thus enabling the group
to capitalize on oil price’s nascent recovery. This includes: 1) farm-in
agreements to five offshore exploration permits within the Taranaki Basin
at New Zealand, and 2) award of Block 30 in Sureste Basin in the Gulf of
Mexico (GoM).

Jefferies Report:

Maintain Buy
We are overall positive on this as it would facilitate the monetisation of its large reserves at
the block, and hence providing the group with improved earnings visibility. Together with
the recently won PSC in Mexico and the group’s recent farm in to five offshore exploration
permits in New Zealand, these provide substantial opportunities to expand its foothold into
the E&P segment. The potential fabrication contracts for the SK408 wellhead platforms is a
further upside to its orderbook replenishment.

hold it.

analysts reports will be released to fund managers tomorrow morning with more positive pitches. there's still more runway to go up.

Patience.

anything below 0.50 is a superb buy IMO.
3 months down the road when the dust settles, 0.60+ is more likely than 0.40.
Just my guess.

Just think about it, the price is back at 0.505 now, exactly the same spot BEFORE the Pegaga contract is awarded, Sarawak first gas, NZ and Mexico contracts were announced.

I think the risk-reward balance has significantly improved, but Sapura is still priced the same.

When you look at this at a 6-12 months horizon instead of minutes and hours and days, the potential upside is quite clear.

Goodluck everyone.

oh it's already 0.505 now. that's fast, lol.

entered 0.475 (long time ago - then it crashed to 0.395)
entered 0.505 (upon pegaga announcement)
entered 0.485-0.49 (this morning)

My TP is 1.0 with the target to double my money, and will be holding on for 1 year or so.
Now just patiently wait for more contract winning announcements + better QR results.

Patience + holding power + willingness to take risk to execute =

best weapon against institutional manipulation and market volatility

It's a 15% discount now from earlier this week due to negative sentiment from trade war which is blown out of proportion.

anything below 0.5 is a steal. it'll bounce back above 0.5 very soon when all these unwarranted trade war / election fears are over.

increased sapura energy holdings from 50% of portfolio to 95% now.

fingers crossed, lol.

It'll be difficult to time the bottom from a panic selling.
I'm starting to accumulate now.

1 more min to opening

haha, they didn't impair the goodwill but impair the PPE instead to reduce future depreciation charge. smart move paving the way for future profits, provided that oil prices stay where they are now.

now that the dark cloud is over, it's a matter of entry timing.
It's difficult to time the market though, good luck guys!

is the mexico contract a big or small contract, any idea?

Ok I checked, the last quarterly results on 7 Dec was announced on 12:57pm.

Hopefully it'll be during lunch time as well. Get your bullets ready! Whatever the outcome, hope everyone makes money. Fingers crossed.

Hi, anyone knows if the QR will be released lunch time or after 5pm?

All bullets ready for knee-jerk reaction tomorrow (or Thursday if they announce after market closes). Really hope it'll close below RM0.50, top up more, and fly me to the moon.

lol, fingers not fast enough to buy at 0.555 sad.

haha, maybe your remisier also tell another client that sapura has recently secured multiple large contracts to replenish order books and is stand to benefit from increasing capex from oil majors as oil price stabilizes above US$65. then they do a cross trade between the buying and selling client and makes commission on both side. seen this too often.

but selling now at 0.565 and below and betting to buy in during any potential knee-jerk reaction tmrw after QR results release could be a legit strategy. better have fast fingers though, haha. and i'm speculating that any knee jerk won't be really a deep one, given that everyone already expected it. A strong knee jerk of 5-10% or more only happens when no one expects it.

Good news announced and price stayed flat at 0.565 because QR is going to be announced tomorrow, of which everyone has already expected some form of impairment which is a paper loss and has no tangible impact on business operations whatsoever except on sentiment.

It's gonna be a lovely time slowly accumulating more these 2 days.

Wow further good news from Sapura. I'm impressed.

Trump's trade war really came at an inopportune time and clouds overall market sentiment, offsetting the positive sentiment from last night's first gas announcement. Otherwise, it probaly would've gone a few more bids higher.

Oh well, let the institutional guys take the weekend to absorb the trade war news, assimilate, rationalize and get used to it.

For now, have a good friday night everyone.

Pmaster Maybe will close 0.55
23/03/2018 15:26

haha, someone is correct.

range bound

anyone has any estimation on the magnitude of positive impact from B15 gas field (SK310) for the announcement yesterday? Haven't seen any analyst reports on that on Bloomberg and Capital IQ yet.

that's a good idea. i'll do the same

institutional investors are just sitting on the sidelines observing:

1) how the potential trade war will play out
2) Quarterly results next week

Trades are likely to be range bound for the rest of the day.

As for me personally, I've entered at 0.465-0.47 and topped up more at 0.505 at 230pm opening trade since pegaga project announced. At this stage, I'm inclined to hold till the widely expected dark clouds (which is likely to have been more than priced in at this stage) over the quarterly results clear.

It's a risky move, but there's headroom for me to take the risk. There's a strong dumping at 0.54 now as I'm typing this. Haha.

The knee-jerk sell down from the last quarterly results was due to the unexpected loss, way below analyst consensus. The current analyst consensus is that next QR will have some impairment. Impairment of course would not look good and may dampen sentiments, but again, it's just a paper loss and not real cash flow loss. It's just a way for the auditors doing their job and express their conservatism on the outlook, that's all.

Investors have even started pricing in "RM8.5bn total impairment of goodwill" since the emergence of the Affin report- that's likely to be overly pessimistic. Goodwill in acquisition sometimes reflect the strategic strengths for the company - and for Sapura, it's their strength by virtue of being the largest integrated O&G services player in malaysia. A total impairment of goodwill is saying that sapura will have no advantage at all being the largest player in the field, but time and time again, their results speak for themselves with recent contract awards.

So, I think there's some upside in that the impairment will not be severe, given where oil price currently is and Sapura starting to show strong momentum in replenishing order books + increasing capex from Petronas & other oil majors.

But again, I might be biased - I'm holding sapura's shares now afterall. Just my opinion, but it's your call.

Another positive announcement:

Sapura Energy Berhad (formerly known as SapuraKencana Petroleum Berhad) (“Sapura Energy”) is pleased to announce that its wholly-owned subsidiary, Sapura Exploration and Production (Sarawak) Inc. (formerly known as SapuraKencana Energy Sarawak Inc) (“Sapura E&P”) has commenced production at the B15 field. The B15 gas field development is a maiden gas development project for Sapura E&P and the first gas milestone was achieved within 2 years of the sanction of its Field Development Plan (“FDP”).

The B15 field was discovered in December 2010 and is located within the SK310 Production Sharing Contract (“PSC”) area, offshore Sarawak, East Malaysia. The development comprises a processing platform with a 35 kilometre evacuation pipeline tied into the existing B11 infrastructure for onwards transmission into the Malaysia Liquefied Natural Gas (“MLNG”) complex at Bintulu, Sarawak.

Sapura E&P is the Operator of the SK310 PSC with a 30% participating interest and partners with PETRONAS Carigali Sdn. Bhd. at 40% and Diamond Energy Sarawak Sdn. Bhd., a subsidiary of Mitsubishi Corporation at 30%.

The production of gas is expected to contribute positively towards the earnings of Sapura Energy Group for the financial year ending 31 January 2019 and the financial periods thereafter.

Decision on court injunction adjourned to 26 march, after private placement.

Rough Summary of Sapura's Market Sentiment:

Dec 2017 - doom, debt: RM15bn
Jan 2018 - jovial optimism, strong rally and rebound, debt: RM15bn
Feb 2018 - hmmm..........., debt: RM15bn
March 2018 - doooooooom, debt: RM15bn
April 2018 - ?

Essentially this stock mainly trades on sentiment.

So far, bearish sentiment is strongly prevailling currently because suddenly everyone realizes that Sapura has RM15bn debt. Oh wait it's been there for years...

Loving the art of it.

@Ekkram haha thanks. I don't really monitor it every minute -I'll probably just key in the order to trigger a sell if share price touches 0.43.

@superbull11 lol, as much as Sapura wants us to donate, the money doesn't actually go to Sapura because the stock market is a secondary market, you know that right?

just waiting for limit up when Mubadala Pegaga proj's winner is announced.

Paper loss RM20k so far from 0.47 entry, somewhat unfazed but will cut loss at 0.43 for re-entry later if a high volume breach below 0.45 happens.

The bulls make $, the bears make $ and the pigs get slaughtered~

the best response by Shahril is announce large new contracts secured asap to quell any uncertainties.

https://my.linkedin.com/in/inani-rozidin

Lol seems like equity research experience only 2 Years 6 Months so far.
actually the equity research profession is so conflicted - you need access to senior management of target firms and you need to manage that relationship - that's why so many ER reports are "BUY" calls.

In that sense you need to give credit to the Affin analyst who has the guts to call a strong "SELL" call that triggered a panic selling.

Shahril probably hates him will ignore his questions during analyst conference calls haha.

Affin analyst linkedin credentials: https://my.linkedin.com/in/jianyuan-tan-acca-aab7677b

Sunway University ACCA
Started work at PWC as auditor in 2012 for 1 Years 7 Months
then jumped to BIMB Securities as Equity analyst for 2 Years 1 Month
then jumped to AllianceDBS Research as Equity analyst for 7 months
then jumped to Affin Hwang, been 1 Year 6 Months till present.

Basically, total equity research experience is 4 Years 2 Months so far.
Your call to believe him or not, haha.

Btw the analyst's details and contacts are as follows:

Tan Jianyuan, ACCA
(603) 2146 7538
Jianyuan.tan@affinhwang.com

Whoever has questions please call and email him hahaha.