VANTNRG: Energy Sector Player Reports Strong Profit Turnaround Amid Restructuring
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank report highlights a significant turnaround in a key energy sector player’s financial performance for 2QFY26, with EBITDA returning to positive territory. This positive shift occurred amidst a comprehensive restructuring effort, despite the company facing headwinds from forex losses and global minimum tax that impacted its reported net loss.
Performance Review
The company’s core results for 1HFY26 were largely in line with expectations. A key driver for the improved performance was the drilling segment, which achieved a profit breakeven as rig utilization recovered, with nine out of eleven rigs actively working. The Engineering & Construction (E&C) segment also contributed robust earnings, primarily from its Brazilian Joint Venture, Seagems. The operational strength in these segments helped to mitigate the impact of external financial challenges.
Strategic Milestones and Financial Efficiency
A major milestone was achieved with the restructuring effective date (RED) on September 25, 2025. This is anticipated to significantly impact the balance sheet, notably by reducing the finance costs base from RM0.2 billion to an estimated RM70-80 million per quarter. Furthermore, all six Brazil Pipelay Support Vessels (PLSVs) have successfully transitioned to new contracts with higher Petrobras rates, a move expected to bolster future revenue streams. The report indicates that the upcoming 3QFY26 accounts will include one-off financial adjustments related to the RED exercise.
Outlook and Recommendation
Looking ahead, the company has secured new multi-year contracts for key drilling rigs, including Sapura Berani, T-18, and T-17, which commenced operations in May and July 2025, respectively. The PLSV segment is projected to generate substantial gross EBITDA exceeding US$400 million, benefiting from sustained high utilization rates and improved average daily rates. The report emphasizes that any cash surplus generated from outperformance, particularly from its Brazil operations, will be strategically channeled towards the early redemption of debt securities, potentially accelerating its path towards PN-17 upliftment. The investment bank maintains a “BUY” recommendation, with an adjusted target price of RM0.25, representing a 25.0% upside from the last traded price of RM0.20.
