KUALA LUMPUR (June 1): Shares in Sapura Energy Bhd fell 11.76% in active trade early on Wednesday (June 1) after the company announced that it had been classified as a PN17 listed issuer due to going concerns over its shareholders’ equity position of RM85 million as of Jan 31, 2022, which was less than 50% of its share capital of RM10.9 billion.
At 9.15am, Sapura Energy was one sen lower at 7.5 sen, with 73.51 million shares traded.
PublicInvest Research has maintained its “neutral” rating of Sapura Energy, with an unchanged target price of five sen, and said the group appears to be a high-profile casualty of the Covid-19 pandemic with operational challenges resulting in impairment losses on goodwill for its drilling segment (RM1.7 billion) and engineering segment (RM1.6 billion), and impairment on its fixed assets (RM2.3 billion).
It said the group had since acted to resolve liquidity challenges and improve its financial health, including negotiations with clients on existing contracts, with the aim of having amicable solutions to recover or limit losses.
“It is also in the midst of negotiating with its vendors on outstanding payments as well as lenders through existing or new facilities and under a scheme of arrangement.
“While recent press reports with regard to the potential financial assistance from various parties have lifted investors’ sentiment, fundamentals of the group remain weak with much more rehabilitation needed.
“We retain our 'neutral' call with an unchanged target price of five sen, though we caution about near-term share price weakness in reaction to this development,” the research house said.