Results Update 2 July 2018 Sapura Energy Bhd

Transcription

1 MALAYSIA INVESTMENT RESEARCH REPORT JF APEX SECURITIES BERHAD (47680-X) Results Update 2 July 2018 Sapura Energy Bhd Lower losses QoQ BUY Maintained Share Price Target Price RM0.64 RM0.80 Company Description Integrated oil and gas company and top 5 engineering, procurement, construction, installation and commissioning (EPCIC) globally Stock Data Bursa / Bloomberg code 5218 / SAPE MK Board / Sector Main / Industrial Syariah Compliant status Yes Issued shares (m) 5, Par Value (RM) 1.00 Market cap. RM3.83bn Price over NTA 2.49x 52-week price Range RM Beta (against KLCI) m Average Daily Volume m 3-m Average Daily Value^ RM124.63m Share Performance 1m 3m 12m Absolute (%) Relative (%-pts) Major Shareholders % SAPURA HOLDINGS SDN BHD 15.9 EMPLOYEES PROVIDENT FUND 7.18 SKIM AMANAH SAHAM BUMIPUTERA 6.46 Estimated free float 51.5 Historical Chart Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Source: Bloomberg Lee Cherng Wee ext. 759 leecw@jfapex.com.my Results Quarterly loss Sapura Energy posted a net loss of RM136m in 1QFY19 vs a net profit of RM27m in 4QFY18. The loss was mainly attributed to continued losses in the Drilling division. Lower revenue - Quarterly revenue fell 40% YoY to RM1.05b following decline in revenue from Engineering & Construction (E&C) and Drilling divisions due to seasonal factor. Stable QoQ 1QFY19 s net loss of RM136m showed improvement from normalised net loss of RM153m in 4QFY18. Quarterly revenue was lower after dropping 11% QoQ. E&C returned to the black 1QFY19 revenue from the E&C segment decreased 45% YoY and 1% QoQ to RM666m. The unit posted a PBT of RM37m compared to a loss before tax of RM22 in 4QFY18 thanks to contribution from joint venture and associates especially from Brazil. Drilling still bleeding Quarterly revenue from Drilling dropped 52% YoY and 20% QoQ to RM183.4m with 5 rigs operating and 10 rigs being stacked. The drilling division loss before tax widened to RM69m vs loss of RM52m in 4QFY18. Lower E&P performance 1QFY19 revenue from Exploration and Production (E&P) increased 8% yoy but dropped 27% QoQ to RM210m after lifting 1.1 MMboe in at a higher price of US$70/barrel vs 1.1 MMboe in 4QFY18 at US$69/barrel. PBT decreased 65% QoQ to RM9m despite higher crude oil prices and steady production due to lower composition of oil compared to gas, which fetches a lower price. Steady orderbook Orderbook remains strong at RM16.7b after winning RM4.5b worth of new contracts so far this year, including RM1.8b secured recently. Sapura Energy is bidding for US$13.1b worth of jobs globally. Going forward, RM5.2b of the orderbook will be booked in FY19F followed by RM3.8b in FY20F and RM7.7b in FY21F and onwards. Higher gearing Net debt of equity inched up to 1.61x (from 1.56x in 4QFY18) as cash dwindled to RM1.4b from RM1.7b in 4QFY18. Management is Please read carefully the important disclosures at end of this publication

2 considering the listing of the E&P division to raise working capital. Earnings Outlook Earnings within expectation 1QFY19 net loss of RM137m is below our FY19 estimate of RM135m net profit but within our expectation while quarterly revenue make up 15% of full year estimate due to 1QFY19 being in the low season. Earnings forecast maintained We are keeping our forecasts for FY19 and FY20 in anticipation of improved performance in the coming quarters and better prospects as shown by rising capex by oil companies around the world. Valuation & Recommendation We are keeping our recommendation at BUY with an unchanged target price of RM0.80 based on 0.5x P/B and a lower NTA of RM1.60 per share.

3 Quarterly Performance (RM million) 1QFY19 1QFY18 YoY 4QFY18 QoQ Engineering & Construction % % Drilling % % Exploration & Production % % Corporate expenses (3.8) (12.3) -69% % REVENUE % % Operating expenses (841.7) (1362.3) -38% % Other operating income % (856.3) -100% OPERATING PROFIT % % Depreciation and amortisation (221.6) (257.7) -14% (243.9) -9% Interest income % 5.4 5% Interest expenses (227.9) (204.3) 12% (210.3) 8% Net foreign exchange (loss)/gain % (81.0) -113% Gain from disposal of asset % % Share of profit from associates & JV % % Profit/loss before impairment (108.2) % (119.7) 10% Provision for impairment (2132.3) - PBT (108.2) % (2252.0) -95% Tax (28.4) (77.0) 63% (34.4) -17% NET PROFIT (136.5) % (2286.4) -94% Normalised PATAMI (136.0) % (153.0) -11% Net margin -13% 2% -192% Normalised EBITDA % % EBITDA margin 22% 26% 20% Operating margin 21% 24% 29% PBT margin -10% 6% -10% Tax rate -26% 74% -29% Normalised PBT Engineering & Construction % % Drilling % % Exploration & Production % 26-65%

4 Financial Summary (RM million) FY end January F 2020F Revenue 8, , , , , , , Operating expenses (6,546.50) (6,870.11) (7,131.59) (6,276.44) (4,505.83) (5,161.88) (4,659.38) Other operating income , Profit from operations 1, , , , , , ,571.8 Net interest cost (428.98) (651.29) (741.92) (776.06) (837.27) (860.31) (776.56) Gain/loss on derivatives (4.08) (0.14) Depreciation and amortisation (638.02) (1,306.19) (1,430.44) (1,792.07) (1,061.98) (1,032.38) (931.88) Impairment on receivables (10.17) (8.09) (0.87) Gain/loss from forex (1.16) (35.04) - - Gain/loss on disposal of asset Share of profit from JV Impairment on investment - - (28.25) Impairment on O&G assets - (54.94) (2,001.00) (282.68) (2,132.29) - - Deposit on acquisition written off - - (172.50) Change in provision Gain from acquisition/disposal PBT 1, , (712.64) (2,323.59) Tax (84.06) (182.50) (78.81) (179.08) (181.23) (57.81) (52.19) PAT 1, , (791.45) (2,504.82) EPS (RM) (0.132) PER (4.8) Net margin 13.4% 14.4% -7.8% 2.7% 2.3% 2.0% 2.0% Tax rate 7.0% 11.3% -11.1% 46.5% -7.8% 30.0% 30.0% Sales growth 21.2% 18.7% 2.4% -24.9% -23.0% 16.8% -9.7% Net profit growth 69.3% 27.6% % 126.0% % 105.4% 9.7% Source: Company, JF Apex

5 JF APEX SECURITIES BERHAD CONTACT LIST JF APEX SECURITIES BHD 6 th Floor, Menara Apex Off Jalan Semenyih Bukit Mewah Kajang Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) PJ Office: 15 th Floor, Menara Choy Fook On No. 1B, Jalan Yong Shook Lin Petaling Jaya Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) DEALING TEAM Kong Ming Ming (ext 3237) Shirley Chang (ext 3211) Norisam Bojo (ext 3233) Institutional Dealing Team: Zairul Azman (ext 746) Fathul Rahman Buyong (ext 741) Ahmad Mansor (ext 744) PJ Office: Mervyn Wong (ext 363) Azfar Bin Abdul Aziz (Ext 822) Tan Heng Cheong (Ext 111) RESEARCH TEAM Lee Chung Cheng (ext 758) Lee Cherng Wee (ext 759) Low Zy Jing (ext 754) Nursuhaiza Binti Hashim (ext 752) Siau Li Shen (ext 753) JF APEX SECURITIES - RESEARCH RECOMMENDATION FRAMEWORK STOCK RECOMMENDATIONS BUY : The stock s total returns* are expected to exceed 10% within the next 12 months. HOLD : The stock s total returns* are expected to be within +10% to 10% within the next 12 months. SELL : The stock s total returns* are expected to be below -10% within the next 12 months. TRADING BUY : The stock s total returns* are expected to exceed 10% within the next 3 months. TRADING SELL : The stock s total returns* are expected to be below -10% within the next 3 months. SECTOR RECOMMENDATIONS OVERWEIGHT : The industry as defined by the analyst is expected to exceed 10% within the next 12 months. MARKETWEIGHT : The industry as defined by the analyst is expected to be within +10% to 10% within the next 12 months. UNDERWEIGHT : The industry as defined by the analyst, is expected to be below -10% within the next 12 months. *capital gain + dividend yield JF APEX SECURITIES BERHAD - DISCLAIMER Disclaimer: The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of JF Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report. Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of JF Apex Securities Berhad and are subject to change without notice. JF Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. JF Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against JF Apex Securities Berhad. JF Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of JF Apex Securities Berhad. Published & Printed by: JF Apex Securities Berhad (47680-X) (A Participating Organisation of Bursa Malaysia Securities Berhad)