KUALA LUMPUR (Aug 27): Sapura Energy Bhd, the most-active counter across Bursa Malaysia, fell as much as four sen or 10% to 37.5 sen so far today as investors and analysts digested information on the oil and gas (O&G) support services provider's rights issue of new shares. On a per share basis, the exercise is seen as book value (BVPS) and earnings (EPS) dilutive due to an expanded share base.

At 11:12am, Sapura Energy saw some 253 million shares changed hands.

Hong Leong Investment Bank Bhd analyst Sean Lim wrote in a report today: "Despite the RM4.0 billion recapitalisation exercise [being] essential for Sapura to lower its gearing level for bigger projects to capitalise on improving job market, we reckon share prices to remain under pressure due to its BVPS/EPS dilution amidst unexciting quarterly results."

"Downgrade to SELL, TP (target price) lowered to RM0.31 on ex-rights basis. Share base is enlarged by 1.7x to 15.98 billion post rights from 6.0 billion previously and to 19.3 billion on a fully diluted basis upon conversion of RCPS-I and warrants. Its forward three-year BVPS is also diluted by 53-54%," Lim said.

RCPS-I stands for Islamic redeemable, convertible preference shares.

(Read more at: Sapura Energy makes cash call at 30 sen per share to raise RM4b)

CIMB Research analyst Raymond Yap said CIMB Research maintained its "add" recommendation for Sapura Energy shares with a new ex-rights sum-of-parts (SOP)-based TP of 53 sen.

"We view the capital raising exercise as necessary medicine for SAPE (Sapura Energy) to get back on its feet and be able to take advantage of the nascent upturn in O&G capex spending. Our ex-rights SOP-based target price of 53 sen is already higher than the current share price of 41.5 sen (Friday closing share price); we advise investors to accumulate now and buy even more on dips to ride the cyclical O&G capex recovery, the Sapura E&P listing and Sapura Drilling tie-up," Yap said.