KUALA LUMPUR (Sept 15): Shares in Velesto Energy Bhd rose 4.76% in active trade on Thursday (Sept 15) morning, following a positive outlook on its turnaround prospects.
At 9.46am, Velesto had gained half a sen to 11 sen, with 22.74 million shares traded.
Kenanga Research has upgraded Velesto to “outperform" at 11.5 sen, with a higher target price of 16 sen (from eight sen), and said it sees the regional and local jack-up rig market improving, with market utilisation reaching a high of 91% in Southeast Asia and 100% in Malaysia.
In a note on Wednesday, the research house said it believes this offers further upside to Velesto’s current rig utilisation and charter rates.
“Hence, we may start to see Velesto turning around as soon as the second half ending Dec 31, 2022 (2HFY22).
“As such, we lower our FY22 loss assumption by 20%, while forecasting a turnaround to a profit of RM87 million in FY23 (versus our previous loss forecast of RM49 million), as we raise both our rig utilisation and charter rate assumptions.
“Our current forecasts are based on rig utilisation assumptions of 60% to 80%, and day rates of US$75,000 (RM339,787.50) to US$85,000," said Kenanga.