See the original (here)
Well, you might have seen out previous post (here) talking about the major rise from 40 cents which isn’t the turning point from the bottom for Sapura Energy.
The quarterly report is finally out and walla! RM 2 billion more in
impairment losses. So many assets to be written off so little revenue to
be tapped on. The previous write off was huge but it goes bigger and
bigger.
Financial Analysis
Forget about the latest P&L as mostly we can’t quite value
operational efficiency anymore due to a huge loss from impairment.
Comparing to a year ago, the company is literally burning cash and the
non current assets are valued much lower than what it was a year ago.
(asset impairment)
This time around, we see retained earnings are left with merely RM 54.8
million which is alarming. Relatively speaking when retained earnings
becomes negative, it is almost similar to eating up the existing paid up
capital by investors. This part of the balance sheet had turned as
fragile as ever!
Cash Creation – BAD
So if you argue that impairment is merely a loss on paper and no cash
transaction were involve then the following comparison might show a
different picture.
The cash creation had turned bad where cash generated from operations
declined by RM 1 billion. This was due to revenue declining RM 1 billion
since comparing to Q4 2016.
With fragile balance sheet, low cash creation, problems looming in
revenue growth. We think that there’s just too many things to be
factoring in. Foresee stock price to go back 40 cents in the next
quarter.
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