CIMB Research raises target price for Velesto to 32 sen

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KUALA LUMPUR (April 19): CIMB IB Research has maintained its “Add” rating on Velesto Energy Bhd at 30 sen with a higher target price of 32 sen (from 28 sen) and said Velesto has increased its contracted utilisation rate for FY19F to 66%, up from 38% just two months ago in Feb 2019, closing in on our 80% forecast.

In a note April 18, CIMB Research said with greater visibility, lower business risk, and Petronas’ apparent resolve to increase drilling activity in Malaysia, the research house reduced its equity beta from 1.5 to 1.

“Cost of equity is lowered from 13% to 10.6%, which raises the DCF-based target price to 32 sen. Maintain Add as we expect even more contract wins,” it said.