AmInvest cuts Deleum’s target price but keeps its buy
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00:00 We end this week with Aminvest's report on oil and gas-related company Deliam Berhad
00:05 after the research house paid it a visit.
00:08 Aminvest has a buy call on the stock but tweaked its target price lower from RM1.33 to RM1.22.
00:14 This still implies a possible upside of 22% from its last close.
00:19 Management continues to reiterate a bullish outlook for the sector, despite ongoing emphasis
00:23 on renewables as a preferred source of energy.
00:27 Management actually sees a strong tender environment for the Integrated Corrosion Solution, or
00:31 ICS, segment as substantial works were delayed during the COVID-19 pandemic, leading to an
00:37 estimated maintenance backlog of two to three years.
00:41 Management is guiding order book wins to improve significantly as early as the first quarter
00:44 of FY24.
00:47 Separately, management updates that Petronas is expected to begin tenders for its maintenance,
00:51 construction and modification services works, amounting to a total of RM8 billion, of which
00:56 Deliam targets to secure around 5% to 10%.
01:00 The oilfield services segment is progressing well and has begun work on six contracts,
01:04 which is expected to add another RM10 to 15 million to its earnings annually.
01:09 Saying that, Aminvest actually cut its FY23 earnings by 30%, primarily due to the delayed
01:14 recovery for the group's Integrated Corrosion Solution segment and higher associated costs
01:19 related to oilfield services contracts and business efficiency improvements.
01:24 Based on Bloomberg data, it is two buys and one sell from UOB Keohian on Deliam, which
01:29 means that the average target price works out to RM1.10, which is 10 cent more than
01:33 its last close.
01:35 [Music]