KUALA LUMPUR (Sept 7): Shares of UMW Oil & Gas Corp Bhd (UMW-OG) climbed 6.56% in active trade today after Macquarie Equities Research upgraded the counter to “outperform” from “neutral”, albeit with a lower revised target price.

At 4.20pm, the stock pared down some gains to trade 6.6% or two sen higher at 33 sen with 37.06 million shares traded, giving it a market capitalisation of RM691.84 million. The counter is currently trading at 0.32 times its net asset value.

Bloomberg reported today that Macquarie analyst Isaac Chow upgraded UMW-OG’s rating to “outperform” but reduced the target price to 56 sen from 67 sen earlier — 24% above consensus average of 45 sen ù based on discounted cash flow (DCF) valuation.

The research house upgraded the rating to “neutral” from “underperform” back in May, on the opinion that its “financial standing and narrow losses should provide a floor for the share price”.

UMW-OG has been on the downtrend from a high of 93 sen since January this year, after it proposed a tripartite merger with Icon Offshore Bhd and Orkim Sdn Bhd. The deal was however called off in May.

UMW-OG’s net loss for the first half of financial year ending Dec 31, 2017 (1HFY17) widened on-year to RM155.1 million, from RM132.32 million previously, no thanks to lower time charter rates and a reduced foreign exchange gain. Revenue fell 1.61% to RM214.19 million from RM217.69 million last year.

On Aug 25, its president Rohaizad Darus said UMW-OG expects its jack-up rig utilisation rate to be stable next year, and that the company is negotiating new contracts at higher daily charter rates.

Presently, all of UMW-OG’s seven jack-up rigs are under charter.