[%LPAz%]
Research by CGS
Add – TP RM0.325

“Business stays strong; new ventures beckon"

■ 1Q24 core net profit was 23% of our previous full-year forecast, below expectations as certain rig items were subject to accelerated depreciation.
■ This has no impact on cashflows; we raise our DCF-based TP to 32.5 sen on a lower Ke rate of 10.6% (vs. 11.2%) as Velesto’s long-term beta has fallen.
■ Reiterate Add as Velesto may deliver very strong results in 2Q24F, it may secure long-term work for two JU rigs, with drillships as a potential venture.

Analyst:
Raymond YAP, CFA
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$KLSE-VELESTO
Research by CGS
Add – TP RM0.325

“Business stays strong; new ventures beckon"

■ 1Q24 core net profit was 23% of our previous full-year forecast, below expectations as certain rig items were subject to accelerated depreciation.
■ This has no impact on cashflows; we raise our DCF-based TP to 32.5 sen on a lower Ke rate of 10.6% (vs. 11.2%) as Velesto’s long-term beta has fallen.
■ Reiterate Add as Velesto may deliver very strong results in 2Q24F, it may secure long-term work for two JU rigs, with drillships as a potential venture.

Analyst:
Raymond YAP, CFA
raymond.yap@cgsi.com