Cash-strapped Sapura Energy Bhd counter has been downgraded to 'Hold' as lingering liquidity issue has affected its job wins, with a lower 52-week target price of 6 sen, down from 8 sen, said BIMB Securities Sdn Bhd (BIMB Securities).

The Practice Note 17 (PN17) outfit was the second most actively traded counter at midday, up 0.5 sen or 9.1% to 6 sen with more than 74 million shares exchanging hands as at 12.30pm today (Sept 29).

The most active counter was Evergreen Max Cash Capital Bhd's (EMCC), a pawnbroking service provider that gained listing in the ACE Market of Bursa Malaysia on Tuesday (Sept 26).

Sapura Energy's stock, which closed at 5.5 sen on Wednesday, inched upwards on Friday morning after announcing a higher net profit for the latest quarter.

It posted a net profit of RM42.8 million for the first quarter ended July 31, 2023 (2Q24), compared to a net loss of RM2.6 million in the same period last year.

Its quarterly revenue was down 2.53% to RM1.14 billion mainly due to completion of integrated rig drilling completion (IRDC) project in 4Q23 for the drilling segment.

Moving forward, BIMB Securities said Sapura Energy's orderbook rose slightly to RM6.3 billion (1Q24: RM5.8 billion) after it secured a transportation and installation (T&I) contract from Azule Energy in Angola with a contract value of US$300 million (RM1.4 billion). This is for the Quiluma and Maboqueiro Platform for Angola NGC project.

"The proposed restructuring scheme (PRS) will include a potential financial investment from a white knight of approximately RM1.8 billion.

"Besides that, Sapura Energy targets to divest SapuraOMV with a preliminary valuation of RM2.25 billion which will be used to pare down its debt involving RM10.3 billion in multi-currency financing (MCF) facilities," it said.

In a note released on Friday, Public Investment Bank Research (PIVB) maintained its 'Underperform' call on Sapura Energy with a higher TP of 3.5 sen (from 2 sen) after accounting for the earnings revision and improvement in its liquidity position.

"The group's cash position improved to RM1.16 billion, 38% higher from RM840 million in 1Q24 indicating the group has gained support from its clients through advances, and vendors through credit term extensions amid limited access to working capital and bank guarantees for project execution," it said.

"Nevertheless, the current cash balance is still far below its existing borrowings and trade payables amounting to RM15 billion.

"We remain pessimistic given the tight deadline for the regularization plan submission (end-Nov 2023), though it is highly likely a deadline extension would be sought," it said.

On Sept 7, Sapura Energy told the stock exchange that it had secured a six-month extension to its standstill period from its multi-currency financing financiers under the Corporate Debt Restructuring Committee (CDRC) regime, extending the end-date to March 10, 2024.

"In line with Bank Negara Malaysia's CDRC Participant's Code of Conduct, the MCF financiers are to continue to observe the informal standstill and withhold all legal proceedings, and/or any other recovery action initiated or intended against Sapura Energy and/or the admitted group of companies," it said.

The oil and gas services provider's top shareholders are Amanah Saham Nasional Bhd with a 33.77% stake, Sapura Holdings Sdn Bhd (10.55%) and Jurudata Sdn Bhd (2.08%). It has a market capitalisation of RM878.8 million.