KUALA LUMPUR: Sapura Energy Bhd shares are on a upside trend riding on the stock's future earnings potential and buoyed by strengthening crude oil prices.
Market analysts said Sapura's outlook is bright and offer investors opportunity to ramp up their investments in the company.
"Sapura shares are at a bargain right now and attractively priced and it is the best time for investors to accumulate the shares now so that investors can reap profits later on once crude oil prices climb higher," said an investment analyst at the Employees Provident Fund.
Sapura shares rose from 31 sen to 35 sen the past few weeks driven by its solid RM16 billion orderbook as well crude oil prices which has the potential to scratch US$70 a barrel in the long term.
The stock was most actively traded last Friday with a total of 139.2 million shares changing hands while its warrants was the seventh most actively traded on Bursa Malaysia.
The EPF source said Sapura shares have been sizzling ever since the company made a RM4 billion cash call with Permodalan Nasional Bhd (PNB) and its partnership with Austria's OMV AG which is already bearing fruit.
"The two corporate exercises have alleviated the company's debt troubles and the lower gearing will give the company more room for the company to push forward and secure new jobs such as at Saudi Arabia's Aramco," said the analyst.
AmInvestment Research which gave Sapura a buy recommendation said its share price could soar to 38 sen mark from about 32 sen presently in the next three to six weeks, boosted by the firm's RM16 billion order book and investors growing confidence in biggest shareholder PNB which augmented its stake in Sapura to 42 per cent from 12 per cent.
Meanwhile, JF Apex Securites has given the stock an even higher price target of 50 sen as the firm has narrowed its losses to RM31 million in the third quarter of 2019 from RM274 million in the same quarter in 2018.
In its research note to investors, JF Apex said Sapura's share prices beefed up due to its solid order book which increased to RM18.6 billion, its highest in 24 months from RM16.9 billion in the last quarter.
"Going forward Sapura is expected to clinch additional contracts of RM6 billion in 2020 and another RM10.3 billion in 2021.
"We expect earnings to improve due to the gradual pickup in global oil and gas capital expenditure spending," said JF Apex also giving the stock a buy recomendation.
AllianceDBS Research meanwhile said Sapura's long term outlook remains strong as its high orderbook points to a potential recovery and is set to clinch further sizeable contract wins.
"Sapura's outlook remains bright as its core loss will narrow in the second half of 2019 due to the realisation of new contract wins and higher Brent crude oil prices which will support the energy segment," said AllianceDBS giving the stock a 57 sen target over the next one year and also a buy recommendation to investors.
International Trade and Industry Deputy Minister Dr Ong Kian Ming had said earlier this month that the oil and gas sector is set to be the next star this year due to its growth potential and this will benefit firms such as Sapura, now that oil prices are set to trade between US$40 and US$70 a barrel in the medium term outlook.