[%BIlS%]
Research by HLIB
Buy (Maintain) – TP RM0.35

“Respectable showing"

Velesto raked in 1Q24 core earnings of RM45.5m (-32% QoQ, +220% YoY), which is inline with our estimate (24%) but above consensus (28%). Post-umbrella contract renewal with Petronas Carigali, the higher DCR of c.USD140k (from USD100-100k) will be reflected from mid-2024 onwards and contribute positively to Velesto’s earnings in the coming quarters. Barring unforeseen downtime, we expect its average JU rigs utilisation to stay above 90% in 2Q24 but a relatively lower fleet utilisation in 2H24 due to SPS scheduled for Naga 2 and 5 in 3Q24 and Naga 3 and 6 in 4Q24. Full year utilisation of FY24 shoul stand at 85% (vs 83% in FY23). Adjust our FY24f/25f earnings by +0.1%/-0.5% after imputing annual report updates and introduce FY26f forecast at RM200.3m. Maintain BUY rating with unchanged TP of RM0.35 – pegged to a PE multiple of 14x of FY25f profits.

Analyst:
Brian Chin
[%TkCJ%]

$KLSE-VELESTO
Research by HLIB
Buy (Maintain) – TP RM0.35

“Respectable showing"

Velesto raked in 1Q24 core earnings of RM45.5m (-32% QoQ, +220% YoY), which is inline with our estimate (24%) but above consensus (28%). Post-umbrella contract renewal with Petronas Carigali, the higher DCR of c.USD140k (from USD100-100k) will be reflected from mid-2024 onwards and contribute positively to Velesto’s earnings in the coming quarters. Barring unforeseen downtime, we expect its average JU rigs utilisation to stay above 90% in 2Q24 but a relatively lower fleet utilisation in 2H24 due to SPS scheduled for Naga 2 and 5 in 3Q24 and Naga 3 and 6 in 4Q24. Full year utilisation of FY24 shoul stand at 85% (vs 83% in FY23). Adjust our FY24f/25f earnings by +0.1%/-0.5% after imputing annual report updates and introduce FY26f forecast at RM200.3m. Maintain BUY rating with unchanged TP of RM0.35 – pegged to a PE multiple of 14x of FY25f profits.

Analyst:
Brian Chin
brianchy@hlib.hongleong.com.my