22 August 2024

Deleum Berhad, a robust financial company in the oil & gas sector, is currently trading at a PE ratio of 8.58, based on a rolling four-quarter EPS of 14.56 Sen, offering a dividend yield of 4.56%.

Looks compelling to buy at RM1.25 Sen. Deleum range from 70 Sen to 82.5 using PE 8.5 to 10 based on FY 2019 EPS of 8.26 Sen.

Financial Performance and Valuation
For the six months ending 30 June 2024 (1H24), Deleum reported a substantial increase in profitability:
• Group PBT rose by 63.0% to RM54.8 million.
• Net profit climbed 67.7% to RM31.6 million.
• Revenue increased by 24.3% to RM387.3 million.
EPS for Q2 2024 was 5.57 Sen, bringing the cumulative EPS for 1H FY 2024 to 7.88 Sen. With positive management guidance, Deleum anticipates achieving an EPS of over 16 Sen for FY 2024.
Valuation and Stock Performance
Based on forward PE ratios of 9 to 10, Deleum's stock could justify a valuation range of RM1.44 to RM1.60.

Over the past 12 months, the stock has traded between 83 Sen and RM1.52.

Deleum is trading at PE8.58 with dividend yield of 4.56%. Current proposed 1st Interim dividend for FY 2024 is 4 Sen ex-date on 12 Sept and payable on 30 Sept. The dividend policy is 50% payout (since FY2010, it has consistently been paying dividend annually) and it is a net cash Co with net cash of RM 219 mil at 30 June 2024 (cash balance of RM237 mil and borrowings of RM17.67 mil). The current assets of RM 537 mil exceed its current liabilities of RM 220 mil by RM317 mil. The Balance sheet is sound with and for FY 2023 Co generated RM79 mil (FY 2012 RM23 mil) operating cash flow and 1H FY 2024 the operating cashflow was RM46 mil. The net asset per share is RM1.075 per share compared to share price of RM1.25.

Deleum 2Q24 pre-tax profit soars 104.6% to RM37.5 million • Robust growth in the Power and Machinery segment, coupled with significant rebound in Oilfield Integrated Services segment, drives strong 2Q24 results Kuala Lumpur, Malaysia, 21 August 2024 – Leading oil & gas (O&G) services provider Deleum Berhad’s (Deleum, the Group, 迪隆, Bloomberg: DLUM MK) pre-tax profit (PBT) soared 104.6% to RM37.5 million in the second quarter ended 30 June 2024 (2Q24) from RM18.3 million in the previous corresponding quarter, mainly driven by robust growth in the Power and Machinery (P&M) segment and a significant rebound in Oilfield Integrated Services (OIS) segment.

Growth in both segments contributed to a 20.1% increase in 2Q24 group revenue to RM225.9 million from RM188.1 million previously. Consequently, net profit surged 130.0% to RM22.4 million in 2Q24 from RM9.7 million last year.

P&M continued to be the largest contributor to the Group’s 2Q24 revenue, making up 78.2%, with the balance coming from the OIS segment.

The Group’s OIS businesses demonstrated significant progress in 2Q24 across multiple areas. Following the successful completion of a sludge treatment pilot project, the segment secured a longer-term contract and potentially will have future similar engagements with other oil terminals which may have the same needs and requirements. Additionally, the solid control operations remain on track with a mix of development and drilling operations throughout the year, coupled with the promising expanding business in Indonesia. These achievements are expected to contribute to sustained momentum in the upcoming quarters.


Prospects by Management
The oil and gas (O&G) industry has shown resilience in overall activities in the first half of 2024, with the oil prices staying within the expected price range. Deleum remains focused on delivering sustainable growth through strategic initiatives and operational excellence while exploring new market.

The Group is investing in digital solutions and innovative technologies to optimise our operations and enhance our service offerings. Leveraging our robust financial position, we actively pursue strategic acquisitions to strengthen our market position and expand our capabilities.

We continue to see strong performance in our Power and Machinery segment, along with a significant rebound in Oilfield Integrated Services segment. These improvements are expected to contribute significantly to our overall performance in the 2024 financial year.

Deleum is encouraged by the continued recovery in global oil demand which supports a resilient outlook for the O&G industry. While there are inherent uncertainties in the global economic landscape, we remain confident in our ability to deliver sustainable growth.
Disclaimer

This publication is not a buy or sell call of the company and the contents of this publication should not be considered as professional financial investment advice or buy/sell recommendations. This publication (analysis) has been written for information purposes and general guidance on matters of interest for discussion only and does not constitute professional advice or legal opinion. The information contained in this publication (analysis) should not form the basis of any decision as to a particular course of action. You should not act upon the information contained in this publication without obtaining specific professional advice. Therefore, every investment decision and its associated risks are the responsibility of the investor.

Above analysis is prepared by the author free of charge solely for educational purpose and discussion in the group consented by the author and shall not constitute an investment advice or recommendation to sell and/or buy the share(s) mentioned in this analysis. The views are based on the author’s assumptions and estimations as of this date and subject to change, for educational and informational purposes. Please consult your licensed adviser in any of your investment decision.
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$DELEUM / 5132 (DELEUM BERHAD)