This article first appeared in The Edge Financial Daily on April 16, 2019

KUALA LUMPUR: Despite clinching some RM1.3 billion worth of contracts last week, shares in Sapura Energy Bhd were sold down yesterday after its second-largest shareholder Tan Sri Shahril Shamsuddin and family sold a total of 600 million shares or 3.76% in the group.

The oil and gas counter declined by one sen or 2.9% to 33.5 sen by the closing bell, leaving the group with a market capitalisation of RM5.28 billion.

It was the second most active stock on Bursa Malaysia with some 11.89 million shares exchanged.

According to Rakuten Trade Sdn Bhd head of research Kenny Yee, the selldown was likely driven by short-term negative sentiment and profit-taking on the back of the Shamsuddin family’s sale.

“They still have a sizeable order book, so investors will want to see them deliver on their numbers,” he told The Edge Financial Daily yesterday.

Analysts, meanwhile, remained sanguine on the stock, especially following the announcement of five new contracts secured last Friday. They include the extension of an existing contract with Petronas Carigali and one new drilling for ExxonMobil, both in Malaysia.

Sapura Energy also bagged a provision to install six subsea pipelines in the Gulf of Suez, marking its first foray into Egypt, as well as a submarine rescue service contract for the Royal Australian Navy and an engineering, procurement, construction and installation works in Indonesia.

According to Bloomberg data, 11 out of 18 analysts observing the stock recommend a “buy” and the rest a “hold”.

In a report yesterday, AmInvestment Research said it expected the new contracts to add 8% to Sapura Energy’s outstanding order book of RM18.5 billion.

MIDF Research, which has a “neutral” view of Sapura Energy, said that it remained wary of the group’s earnings prospects as its drilling segment has yet to break even.

Sapura Technology Sdn Bhd was announced to have pared down his stake in a stock exchange announcement by Sapura Energy to Bursa Malaysia last Friday.

The shares changed hands through several off-market deals at 31 sen per share, according to Bloomberg data. The transaction price was one sen above the group’s rights issue price of 30 sen, but below the closing price of 34 sen for both days.

Following the stake sale, Sapura Technology holds 12.81% of Sapura Energy. It is still the group’s second largest shareholder after Amanahraya Trustees Bhd with 26.93%.

This follows a RM4 billion cash call by Sapura Energy, which recorded a subscription rate of 81.5% for its rights issue that closed on Jan 16, making it undersubscribed.