Deleum advances 1.29% as analysts see attractive yields at current prices

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KUALA LUMPUR (Dec 5): Deleum Bhd shares rose 1.29%  at mid-morning on Friday in thin trade after AllianceDBS Research maintained its “Hold” rating on Deleum at RM1.55 with a lower target price of RM1.65 (from RM1.90).

The research house has also trimmed FY14-FY16F earnings by 2%-5% as it now expects the MRO (Maintenance, Repair and Overhaul) division to breakeven at best, instead of turning around.

At 10.23, Deleum rose two sen to RM1.57 with 76,500 shares done.

In a note Friday, the research house said despite a healthy flow of MRO work orders, the division had reverted to losses in recent quarters due to weaker margins and higher operating expenses.  

“We cut target price to RM1.65 from RM1.90 previously after downgrading earnings and target valuation to 10x PE from 11x, following the broad O&G sector de-rating.

“But we would Hold the stock as Deleum has a 50% dividend payout policy which at the current share price implies attractive 5.3% yield (FY15F DPS),” it said.