KUALA LUMPUR: Public Investment Bank Research (PublicInvest) is ceasing coverage on Sapura Energy Bhd despite an improved first half of financial year 2025, citing a deteriorating financial position and its unresolved Practice Note 17 status.
The research firm said the move is due Sapura Energy's negative equity of RM4.3 billion, unresolved PN17 status since May 2022 and its efforts to redeploy resources to broaden its sector coverage.
Sapura Energy reported a net profit of RM235.8 million for the 1H of FY2025, exceeding expectations on robust performances from higher project progress and activities level.
Excluding extraordinary items amounting to RM105.9m, Sapura Energy reported core net profit of RM100.9 million in the second quarter (Q2) FY25, declining by 25.5 per cent due to lower contribution from its joint venture (JV).
Overall, Sapura Energy recorded core net profit of RM235.8 million in the first half (1H) of FY25, reversing its losses of RM163.2 million in 1HFY24.
"This exceeds our and consensus estimated full-year net loss of RM397.1 million and RM504.0 million respectively with variance broadly due to betteroperating margins," it said in a note.
PublicInvest said Sapura Energy confirmed that the disposal of its 50 per cent equity stake in SapuraOMV Upstream is expected to be finalised by next year, a slight delay from initial expectation by end of this year.
"Despite this disposal being in the pipeline, we believe the company would need to continue to rely on further extension beyond current approved timeline for its PN17 regularisation plan (until November 2024) and debt restructuring plan (until March 2025).
"Our last call is Underperform with target price of 35 sen," it added.Ends