KUALA LUMPUR, Dec 14 ― MIDF Research has kept its "buy” call on Sapura Energy Bhd (SEB) but with a lower target price of nine sen versus 14 sen previously after the energy services and solutions provider fell into the red in the third quarter ended October 31, 2021 (Q3 FY22).

SEB yesterday reported a net loss of RM669.34 million for the quarter compared with a net profit of RM17.21 million a year earlier.

The research house said that while SEB's revenue rose to RM1.45 billion in Q3 FY22 from RM1.33 billion previously, it remained below expectation as the cumulative nine-month revenue stood at 60.7 per cent of its yearly estimate.

"The low revenue was due to lower revenue from its operation and maintenance business division, offset on a quarterly basis by its drilling segment,” MIDF Research said in a note today.

Given the lower-than-expected earnings, the research house has revised its FY22 and FY23 earnings forecast downwards to deficits of -RM1.3 billion and -RM247.7 million, respectively.

MIDF Research said the gradual reopening of international borders as the pandemic recovery progressed presented SEB with the opportunity to obtain more contracts in its engineering and construction and exploration and production divisions.

"We opine that despite the lower earnings, the group’s strong order book of RM7.6 billion showcased the resiliency and trustworthiness in its services, equipment and operations on a global scale.

"We believe its contract wins and future prospects will continue to sustain its bearing in the sector,” it added.

At 12.15pm, Sapura Energy was flat at five sen, with 57.38 million shares transacted. ― Bernama