KUALA LUMPUR: Sapura Energy Bhd is set for a bigger boost on its future earnings potential now that Permodalan Nasional Bhd (PNB) has strengthened its grip on the oil and gas giant.
Analysts said Sapura Energy's future income is already locked in due to its long term contracts and the prospects of better crude oil prices.
"Sapura Energy is poised for brighter skies now that it has received a vote of confidence from state-owned fund and asset manager PNB.
"On top of that, Sapura is in the good hands of its president and chief executive officer Tan Sri Shahril Shamsuddin who has vast experience in the oil and gas sector able to steer the company to greater heights," said a Maybank Investment analyst.
The analyst added Sapura Energy has nowhere to go but up due to its fat order book of more than RM18 billion and will also be able to ride over the challenging times as crude oil prices are still good at current levels and it will be still be able to register a decent profit.
He added PNB manages assets and investments worth more than RM80 billion and by increasing its stake in Sapura Energy, it demonstrates PNB's growing confidence in Shahril as well as Sapura Energy's future income growth.
"Sapura Energy is now in the right growth trajectory and is poised for recovery in tandem with the world's robust energy sector as well as recovering crude oil prices," said the analyst.
Sapura Energy received shareholders nod at its extraordinary general meeting last week to raise RM4 billion via a cash call exercise.
During the meeting, PNB has also increased its stake in Sapura to 40 percent from 12 percent before.
"Sapura Energy has increasingly become one of PNB' s important portfolios. Maybe oil prices are low right now but PNB recognises the fact that crude oil prices can climb in the future thus benefitting Sapura as well as PNB
shareholders and other stakeholders.
Let's not forget that PNB also manages unit trust schemes for the people such as Amanah Saham Nasional and Amanah Saham Bumiputera. Any positive development at Sapura such as higher net profit will also trickle down to the people via dividend payments."
A PNB source meanwhile said the country's largest fund manager is anticipating that crude oil prices has the potential to surge perhaps more than US$100 per barrel in the future.
"The US-China trade war will taper down and once this happens, oil prices may skyrocket due to burgeoning energy demand which is outpacing global oil supply.
"Once oil prices surge, Sapura Energy together with PNB will be able to reap the profits of higher oil prices which
will bolster their earnings.”
He added PNB has been known in the past to venture into oil and gas companies by buying up stakes in oil and gas firms but the equity has always been relatively small to medium in investment value.
PNB's 40 percent stake in Sapura Energy is by far the biggest ever foray into the oil and gas sector as it is preparing for a better future able to reap the rewards once oil prices rebound.
"PNB is also wary of putting all of its investments in one basket. It is better that PNB diversify its investments to oil and gas and not just focus on traditional sectors such as property, plantations, banking and manufacturing to name a few.
Meanwhile, an analyst at a local brokerage said other international investors would have no qualms to tie up with Sapura in the future knowing that the company is steadfastly backed by PNB.
"Other investors would not hesitate to invest in Sapura Energy in the future as the PNB brand is already a strong endorsement erasing any doubts investors have on the company's capability to grow," said the analyst.
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