KUALA LUMPUR: Sapura Energy Bhd's low share prices, which is at its lowest currently, is expected to be temporary as the oil and gas (O&G) giant's fundamentals are solid, supported by rebounding crude oil prices.
Traders and market analysts said Sapura's soft share prices fluctuate all the time reacting to speculation and market sentiments and does not reflect the real situation of the company.
"In this case, Sapura shares had to weaken as it had been on an uptrend the past month. The stock is just taking a breather and will rebound once crude oil prices strengthen," said an investment analyst at the Employees Provident Fund (EPF).
Sapura's share price fell to a record low of 25.5 sen on Thursday despite a rise in crude oil prices to US$62.19 a barrel.
"Sapura shares are on the downtrend right now because it has been surging for the past month and investors are now taking their profit.
"But over time, Sapura stocks will turn around as the company is on a solid footing with a whopping RM16 billion order book," another analyst noted.
To note, Sapura is now cash rich with RM8 billion under its belt after completing its cash call with Permodalan Nasional Bhd (PNB) last week and shareholders gave the nod to its partnership with Austria's OMV AG group.
"Sapura is starting fresh on a clean slate, reinvigorated, its balance sheet is cleaned up and debt trimmed. The poor share price belie its fundamentals," said an analyst at Public Investment Bank Bhd.
Another market analyst said only the retail investors are spooked but institutional investors are staying put with Sapura solidly backing the stock.
"That's the nature of the stock market always behaving on a knee-jerk reaction and the perception right now is that crude oil prices are poor and everybody should sell oil and gas stocks which include Sapura.
"But in reality, the present situation could present an opportunity for investors to buy Sapura stocks at discounted prices, hold on to it and make profit later once the oil and gas sector return to profitability. Sapura's weak share prices is just temporary," he said.
He added investors should not adopt a 'herd mentality' but instead emulate PNB which has faith in Sapura by subscribing to its cash call to raise RM4 billion.
Despite the gloomy outlook, most analysts have a "Buy" or "Hold" recommendation on Sapura as it presents an attractive buying opportunity.
These include Public Investment, Am Investment and JF Apex Securities all recommending investors to buy Sapura stock due to its earnings potential in the future.
During Sapura's annual general meeting in July last year, president and chief executive officer Tan Sri Shahril Shamsuddin had said investors should measure the company's future growth not just solely by its share price but also measure the firm relative to others that have gone bust locally and globally.
He said Sapura should also be measured in non-financial terms such as its production sharing contract that it won in Mexico and Brazil which will contribute to its future growth.
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