KUALA LUMPUR: Investors may be taking a more bullish view of Sapura Energy Bhd
on news that its order book is getting a lift from its recent project wins, not least the maintenance, construction and modification (MCM) job from Petronas Carigali.
Although the value of the contract is undetermined, it is seen to be the highlight of Sapura Energy’s recent project wins, with the highest value.
The new contracts- four domestic and one international - increase the oil and gas services company’s earnings visibility, but it is still some ways from replenishing analyst targets on its order book.
“Year to date, new contract wins secured amount to RM2.8bil, which is tracking behind our order book replenishment target of RM4bil,” said Affin Hwang Research.
Sapura Energy came under selling pressure following substantial shareholder Tan Sri Mokhzani Mahathir’s sell-off of his entire stake in the company earlier in November.
However, news of the recent job wins may put it back on investors’ radar screens.
Looking at the share price chart, Sapura Energy is trading at relatively attractive levels. On Thursday, the stock opened higher at RM1.46, rising from the previous day’s close of RM1.40.
Nevertheless, investors were quick to take profit and moderated the gains to close at RM1.42 on Thursday.
The counter is still under pressure from the simple moving average lines with complete dead crossings hovering above the counter. These SMAs pose a strong resistance to the counter at the RM1.48-RM1.53 range.
Above that, the short-term declining trendline that started on April 12, remains intact and the stock will have to move beyond the RM1.62 level to break out of this trap.
At its current price level, Sapura Energy is not far off from the immediate support of RM1.38, and more concrete support in the form of the all-time low of RM1.29 set on June 29.
But not all is doom and gloom for Sapura Energy. While the technical indicators remain in a bearish posture, there is a glimmer of hope in that they show an oversold situation.
The daily slow-stochastic momentum index has moved into oversold territory and looks set in that direction for the time being.
The daily moving average convergence/divergence histogram, however, has flattened out just below the neutral line, and may be headed north in the event of more positive catalysts.
The 14-relative strength index is still in its early stages of building strength, bouncing off the Oversold line to head northwards.
The bulls look poised to charge but amid weak market sentiment investors need more catalysts to lead the way.
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