Sapura Energy falls into the red in 3Q; its shares hit record low

This article first appeared in The Edge Financial Daily, on December 8, 2017.
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KUALA LUMPUR: Sapura Energy Bhd, which saw some 20% of its market capitalisation wiped out yesterday as its shares plunged to a record low, fell into the red after posting a net loss of RM274.41 million in its third quarter ended Oct 31, 2017 (3QFY18), compared to a net profit of RM158.06 million a year ago.

The group, formerly known as SapuraKencana Petroleum Bhd, recorded a loss before tax of RM209.7 million, which was RM409 million lower compared to the profit before taxation of RM199.3 million it had booked a year ago, in line with lower revenue from the engineering, construction and drilling business segments.

The net loss, the group said in a Bursa Malaysia filing, was also a result of lower contribution from its share of profit from joint ventures, due to the share of loss on the disposal of vessel from SapuraAcergy Sdn Bhd, which amounted to RM46.1 million.

Quarterly revenue fell 42% year-on-year to RM1.28 billion from RM2.22 billion.

For the cumulative first nine months of FY18 (9MFY18), the group recorded a net loss of RM217.95 million compared to a net profit of RM380.64 million last year, while revenue fell 19% to RM4.71 billion from RM5.84 billion in 9MFY17.

Going forward, Sapura Energy said the group’s current performance is a reflection of the prolonged low levels of capital spending within the industry.

“The environment continues to be challenging and will persist in the short- and medium term. The group is currently considering various strategic and operational plans to mitigate the impact and improve the group’s competitive position,” said Sapura Energy president and group chief executive officer Tan Sri Shahril Shamsuddin in a separate statement.

On the group’s 3QFY18 results, Shahril said the group still managed to generate a positive earnings before interest, taxes, depreciation and amortisation (Ebitda) contribution of RM253 million.

“For the service business, we remain committed to securing new projects globally. Our recent contract wins of RM1.5 billion signify the group’s ability to remain competitive in expanding our footprint and service offerings. Concurrently, we continue to focus on executing existing projects in Southeast Asia, India, Turkey and Brazil.

“In our E&P (exploration and production) business, we have completed the SK310 B15 gas field development project. We are confident the commencement of SK310 B15 gas production, combined with development opportunities presented by the significant discoveries in the SK408 gas field, will provide long-term financial visibility to the group,” he added.

The dismal 3QFY18 results wiped off RM1.47 billion from Sapura Energy’s market capitalisation in one day, as the group’s shares tumbled 24.5 sen to 96.5 sen after 128.54 million shares were traded, giving it a market capitalisation of RM5.78 billion.

It was the most actively traded counter of the day, and was the 7th top losing counter.

As at April 28, 2017, Shahril owned a 17.44% stake in the group, while Tan Sri Mokhzani Mahathir, son of former prime minister Tun Dr Mahathir Mohamad, had 10.34%.  

However, Mokhzani exited the group’s substantial shareholders’ list on Nov 7 after selling 384.97 million shares, which represented a 6.4% stake in the company, via his private investment vehicle Khasera Baru Sdn Bhd.