Thursday 28 Mar 2024
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KUALA LUMPUR (June 16): SapuraKencana Petroleum Bhd dipped as much as nine sen or 4% after the group reported a 49% fall in first quarter net profit from a year earlier.

SapuraKencana (fundamental: 1.3; valuation: 1.4) shares dipped to its lowest so far today at RM2.33.

At 10.01am, the stock erased part of its losses to trade at RM2.39 with some 3.14 million shares changing hands.

Yesterday, SapuraKencana shares dropped 17 sen or 7% to close at RM2.54 with 18 million shares done. The shares had fallen ahead of the company's first quarter financials announcement.

The oil and gas support services player announced net profit fell to RM260.69 million in its first quarter ended April 30, 2015 (1QFY16) from RM509.42 million.

Revenue fell to RM2.26 billion from RM2.44 billion. 1QFY16 net profit had fallen significantly as net profit a year earlier included a RM177.84 million gain from acquisition of subsidiaries, according to SapuraKencana's income statement.

Today, Hong Leong Investment Bank upgraded SapuraKencana shares to "buy" from "hold" with an unchanged target price (TP) of RM2.85.

Hong Leong said the upgrade took into account SapuraKencana's share price's substantial decline.

"SapuraKencana's share price has corrected by 13% since our downgrade," Hong Leong said in a note to clients.

Hong Leong noted that SapuraKencana's order book stood at RM26 billion and in terms of earnings visibility, 78% of its FY16's forecast had already been secured.

"We understand the company has high chance to secure some international contracts in near term," Hong Leong said.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

 

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