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28 February 2023. Tuesday
KUALA LUMPUR (Feb 28): Hong Leong Investment Bank (HLIB) Research had downgraded Velesto Energy Bhd to “sell” at 28.5 sen with a lower target price (TP) of 21 sen (from 29 sen), and said Velesto reported a 4QFY2022 core net profit of RM2.6 million (-82% q-o-q, -52% y-o-y), which brought FY2022 core net loss to RM71.8 million (FY21: -RM182.1 million).
In a note on Tuesday (Feb 28), the research house said it deemed the results to be below house (FY22f: -RM17.9 million ) and consensus expectations (FY22f:-RM27.9 million).
HLIB said it is expecting a substantially stronger showing in FY2023, as Velesto has guided at significantly higher utilisation rates and daily charter rates for its jack-up drilling rigs.
“With that, we are forecasting Velesto to turn profitable in FY23-24, as we expect to see a pick-up in drilling rig tenders this year amid the current elevated crude oil price environment, leading to increased activity in the sector.
“We downgrade Velesto Energy to ‘sell’ with a lower TP of 21 sen — pegged to an unchanged P/E multiple of 14x on revised FY24f profits.
“We think Velesto’s valuations are rich and has gone past its fundamentals, despite its strong turnaround prospects and growth trajectory,” it said.
Read also:Velesto slumps 27% in active trade after 4Q net loss
