KUALA LUMPUR (June 28): Sapura Energy Bhd shares rose 1.69% in active trade this morning after the company narrowed its net loss in the first quarter ended April 30, 2019 to RM109.1 million from RM135.73 million a year ago, as it benefited from savings in finance costs after it repaid borrowings following the completion of certain corporate exercises it undertook — as well as higher revenue.

At 9.06am, Sapura Energy added 0.5 sen to 30 sen with 7.02 million shares trade, taking its capitalisation to RM4.79 billion.

Quarterly revenue shot up 93% to RM1.63 billion from RM845.17 million previously, supported by strong growth in its Engineering & Construction (E&C) and Drilling segments.

Going forward, the group said it has secured various contract wins which are expected to increase its asset utilisation and further contribute to improving its financial performance. Its order book for the current quarter is at RM17.3 billion, with cumulative new contract wins to-date of approximately RM2.3 billion.

Meanwhile, Hong Leong IB Research has maintained its “Buy” rating on Sapura Energy Bhd at 29.5 sen with a lower target price of 35 sen (from 43 sen) and said Sapura’s 1QFY20 core net loss of RM203 million came below expectations due to higher finance cost and weaker JV & associates contribution.

In a note today, the research cut its FY20 projection to RM132.9 million core losses from RM78.7 million core profit and FY21 earnings by 7% on higher interest expenses and lower contribution from the PLSVs contribution.

“Having said that, we still believe Sapura should be recording better sequential quarterly results and turnaround in the 2HFY20 due to pick up in E&C and drilling contribution, as well as interest savings after paring down its debt.

“All in, maintain Buy rating on the stock with lower target price of 35 sen (from 43 sen) pegged to lower 0.5x FY20 P/B,” it said.