Sapura set to achieve earnings recovery in 2Q26
The research house said in a report that the order book for the group's subsidiaries and joint ventures in 1Q26 declined to RM7.9bil (4Q25: RM8.5bil) and RM4.8bil (4Q25: RM5.5bil), respectively, on slower replenishment.
In 1Q26, Sapura Energy reported a net loss of RM477.96mil, compared with a net profit of RM82.13mil in the previous corresponding period, while revenue dropped to RM801.37mil from RM1.18bil a year earlier.
The losses were mainly due to operational challenges in executing an engineering, procurement, construction and installation (EPCI) contract in Angola.
The group's engineering and construction segment also took a hit of RM304mil for foreseeable losses from that project.
Meanwhile, the drilling segment saw a weaker asset utilisation rate with drilling days declining to 604 days (1Q25: 750 days, 4Q25: 729 days) as the T-17 and T-18 rigs were kept partially active amid transitioning to new contracts.
Its operations and maintenance segment was the only one that was profitable, with a pre-tax profit of RM20mil despite activity being slightly weaker in the quarter.
However, BIMB Research said Sapura is expected to achieve earnings recovery in 2Q26 onwards.
'This will be driven by a turnaround in the Angola project, which is slated for completion by December 2025 and higher drilling rig utilisation and daily charter rates on commencement of new contracts,' the research house said.
BIMB Research also noted it was surprised by another project cost overrun during 1Q26, but 'Sapura's management had guided that it does not foresee this recurring for the remainder of the year'.
Separately, Sapura also announced that Bursa Malaysia has approved its proposed regularisation plan.
According to BIMB Research, Sapura now still faces some hurdles to get approval from the Securities Commission to obtain a waiver from having to undertake a mandatory general offer before it can finally execute its debt restructuring plan targeted for completion by August 2025 at the earliest.
'The exit from PN17 status may be realised in the second half of next year,' the research house added.
BIMB Research maintained a 'hold' call on Sapura with a target price of four sen per share.
Separately, UOB Kay Hian Research (UOBKH Research) said Bursa Malaysia's approval of Sapura's regularisation plan marks the beginning of the company's true recovery.
'Sapura is now working hard to meet the August 2025 restructuring date, or latest by the long-stop date which was decided for March 11, 2026.
'Assuming two consecutive quarters of profits, the earliest horizon for Sapura's PN17 status to be removed would be the second half of next year.'
UOBKH Research noted that Sapura is planning a restructuring aimed at cutting its debts from RM10.8bil to RM5.6bil.
'Deemed as sustainable debt, the RM5.6bil is equally split between two divisions – a Brazilian joint venture for pipelaying support vessels, and drilling.
'The repayment schedules for the sustainable debt ranges between RM200mil and RM700mil.'
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