Velesto Energy (former UMW Oil & Gas)

Velesto Energy (former UMW Oil & Gas)

Postby winston » Sat Oct 18, 2014 4:54 am

not vested

UMW OIL & GAS CORP BHD

By Maybank IB Research

Buy (unchanged)
Target Price: RM5.15

UMW Oil & Gas Corp Bhd’s jack-up drilling rigs Naga 7 and Naga 8 are on track to meet delivery schedule, said Maybank IB Research.

It said UMW-OG’s most recent newbuild jack-up drilling rig Naga 6 had met the delivery schedule and had already secured a charter contract from national oil companies.

This, it added, vindicated the company’s move to buy this China-build rig. It noted Naga 6, which was built by China Merchants Heavy Industry (Shenzen) Co Ltd, did not face any delay setback or cost overruns.

Maybank IB said the rig shared similar specifications with Naga 2 and Naga 3 rigs, which ensured a more equitable cost management for its fleet of rigs.

The research house said Naga 7, which was also being built by China Merchant, was on track to meeting its delivery deadline in December and had secured a contract (commencing in January 2014) prior to delivery.

“Naga 8, being built at Keppel’s yard, is already 57% completed and should be ready for delivery in September 2015,” it added.

Maybank IB also noted that UMW-OG had also successfully secured charter extensions for Naga 2 and Naga 3 to 2015 at similar rates.

All in, the group’s order backlog stood at RM1.48bil as at August 2014. Maybank IB maintained its “buy” call on UMW-OG with target price of RM5.15 at 23 times 2015 price-earnings ratio.

Source: The Star
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Re: UMW Oil & Gas

Postby winston » Thu Oct 23, 2014 5:43 am

UMW OIL & GAS BHD
By CIMB Research

Add
Target price: RM5.11

CIMB Research said it was encouraged that management was unperturbed by the adverse oil price movements that resulted in a sell-down of UMW-OG shares.

It noted that management was sticking to its plan to add at least one rig per annum, with financial year 2014 being exceptional given the delivery of three jack-ups - Naga 5, Naga 6 and Naga 7.

Naga 8 will arrive in September 2015.

The research house said UMW-OG president Rohaizad Darus had also provided assurance of the company’s order book stability, with contracts worth RM2.1bil as at Aug 31.

UMW-OG’s tender book stands at RM5.9bil, which comes from a staggering 23 bids for short-term and long-term contracts in Malaysia and abroad, highlighting strong demand for jack-ups.

CIMB Research said Rohaizad had also assured it that charter rates for the rigs had been locked in. Furthermore, Naga 6, which was docked at the Vung Tau yard earlier, was already at the Diamond field.

The research house said it continued to value the stock at 21.2 times calendar year 2016 price to earnings ratio, which is a 30% premium over its target market P/E of 16.3 times.

It maintained its “add” call, with the active fleet expansion and an upcoming contract for Naga 8 as potential re-rating catalysts.

It advised investors with a long-tem investment horizon to take advantage of the share price correction to accumulate.

Source: The Star
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Re: UMW Oil & Gas

Postby winston » Tue Jan 02, 2018 12:44 pm

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UMW Oil & Gas Corp Bhd - Bouncing back

By Billy Toh

UMW Oil & Gas Corp Bhd (UMW O&G) could turn around in 2018 as its earnings recovery is on sight.

The country’s biggest jack-up rig operator has returned to the black in the third financial quarter ended Sept 30, 2017 (3QFY17), with a net profit of RM3.4 million, or 0.16 sen per share, compared to a net loss of RM135.4 million, or 6.26 sen per share.

UMW O&G has seen its fleet utilisation improve from a dismal average of 21% in the 1QFY16 to 68% and 90% in 2QFY17 and 3QFY17 respectively.

According to TA Securities analyst Abel Goon, UMW O&G’s management expects the utilisation rate to be greater than 90% in 4QFY17, while FY18 will realise at least 80% utilisation rate.

“For UMW O&G, one of the key risks is the idling costs incurred. With the utilisation rate now back to about 90% level, the company should see a turnaround in 2018.

Although the rates remain at a fairly low level, the company would turn profitable if the management could maintain the utilisation rate,” Goon told The Edge Financial Daily over a phone call.

He added that UMW O&G should be able to secure more drilling contracts from Petroliam Nasional Bhd’s (Petronas) prioritising local content.

Based on UMW O&G management’s feedback, Goon pointed that Petronas requires at least 12 rigs in Malaysia for FY18. UMW O&G currently has seven premium jack-up rigs generating 99% of the group’s revenue.

Further, it is on a stronger financial footing after the completion of RM1.8 billion rights issue.

UMW O&G has guided that a one-time write-off of unamortised transaction costs plus potential asset impairment loss arising from a year-end review in 4QFY17 could weigh on its annual earnings for the financial year ended Dec 31, 2017 (FY17).

Goon reckons the market has priced in a large impairment in 4QFY17, which is why the share price remains at a subdued level.

At the current price, UMW O&G is trading at about 0.5 times its book value, one standard deviation below its historical average, despite the expected turnaround in its operations, alleviations of short-term liquidity risks and upwards trajectory seen in oil prices.

TA Securities has set a target price of 51 sen a share, indicating a potential upside of 67.2% from its closing price of 30.1 sen last Friday.

Nonetheless, there remains downside risks for O&G players, especially if the crude oil price sees another sharp decline, which could lead to low utilisation rate.

The higher-than-expected finance costs, despite the reduction in borrowings, could also hurt UMW O&G, which has a relatively high gearing level.

Source: The Edge
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Re: UMW Oil & Gas

Postby winston » Thu Jan 18, 2018 8:30 am

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UMW OIL & GAS CORP BHD

Sell (downgraded)
Fair value: 30 sen

AMINVESTMENT Bank Research has downgraded its recommendation on the soon-to-be rebranded UMW Oil & Gas Corp (UMWOG) from “hold” to “sell”, as the share price has rebounded above its unchanged fair value of 30 sen per share, based on a 40% discount to the diluted book value of 50 sen per share.

The research house says the group has secured the contract to provide hydraulic workover units (HWUs) to Petronas Carigali under an umbrella contract.

“These services involve maintenance and/or remedial treatments on an oil or gas well.

“This could involve the use of all or any of UMWOG’s 5 HWU, namely UMW Gait 1, UMW Gait 2, UMW Gait 3, UMW Gait 5 and UMW Gait 6 to undertake workover services.”

AmInvestment Bank Research said the contract, which commenced on Dec 22 last year, is under an umbrella framework which may comprise a series of individual orders and call-outs.

“It has a term of three years with an option to extend for one more year. At present, there has not been any call-out or work order, which will be made at stipulated price, for those HWU services.

The research house says HWUs currently represent a minor part of the group’s asset base and is registering losses for the group, given that the HWUs are largely idle over the past year.

“While this award is mildly positive for the group, our forecasts are maintained as the utilisation of these HWUs do not have a high degree of certainty.”

Separately, even at near full rig utilisation of 90% in the third quarter of 2017, AmInvestment Bank Research said UMW O&G still suffered a minor core loss of RM4mil.

“As there will be three rigs out of charter in the first quarter of 2018 or a utilisation rate of 60%, we expect a resumption of losses for the group.”

Source: AmInvestment Bank
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Re: UMW Oil & Gas

Postby winston » Mon Mar 05, 2018 8:47 am

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Stock on Radar - HLIB Retail Research
Trading Buy: UMWOG - 5243
(Last price: RM0.310, Potential upside +22.6%)

Company Profile
• UMWOG (~59% owned by PNB group) is a Malaysia-based, Petronas-licensed multinational provider of drilling (contributed 97% to FY17 revenue) and oilfield services for the upstream segment of the O&G sector.

Trading Catalyst
• HLIB has a BUY rating with TP of RM0.44, or 42% upside.
• The worst is over for UMWOG post restructuring exercise (completed in Sep 2017) with net gearing is expected to slash to 0.3x in FY18 (from 1.4x in FY16) and turnaround to a FY19 RM16m net profit from FY16-18 core losses of RM612m.
• Upside bias towards RM0.38 pending a downtrend resistance breakout.

Technical View
• Resistance: RM0.325 / RM0.355 / RM0.380
• Support: RM0.300 / RM0.295
• Cut loss: RM0.280

Key Financial Stats
• Trading at 0.81x P/B, supported by a turnaround in FY19 with RM16 profit from a FY16-18 core losses of RM612m.

Source: Bloomberg, HLIB
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Re: UMW Oil & Gas

Postby winston » Thu Feb 28, 2019 9:20 am

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4Q18 ahead of expectations

Maintain BUY and MYR0.33 TP

FY18 core loss was less than the street’s expectation due to a stronger 4Q18, fuelled by higher-than-expected JU’s utilisation.

Overall, we remain positive on Velesto for its secular growth off its trough and leaner financials.

Velesto, in our view, is most adept to benefit from PETRONAS’ increasing offshore drilling activities in Malaysia.

Our unchanged TP of MYR0.33 is based on 1x EV/ replacement value. Maintain BUY.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/1 ... 47b18f.pdf
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Re: Velesto Energy (former UMW Oil & Gas)

Postby winston » Thu Feb 28, 2019 10:34 am

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Velesto Energy Berhad

A 4Q18 sprint into the black

FY18 core net profit of RM3.2m was slightly above with our RM1m forecast, but significantly ahead of Bloomberg consensus’ RM23m net loss.

Maintain Add with an unchanged DCF-based target price of 28 sen.

Petronas’s drilling activity in FY19F is likely to pick-up vs. FY18, helping to drive an expected increase in utilisation from FY18’s 73% to FY19F’s 80%.

Source: CIMB

https://brokingrfs.cimb.com/uCKrkACypar ... -cROg2.pdf
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Re: Velesto Energy (former UMW Oil & Gas)

Postby winston » Tue Mar 05, 2019 9:42 am

Up, up and away

A rise in day rates is a major catalyst

Velesto is optimistic of 2019, with improving JU utilization, earnings turnaround and improving cashflows.

A recovery in DCR is not entirely ruled out.

For every USD1k rise in DCR, its bottomline would improve by 33%.

Reiterate BUY and MYR0.33 TP, based on 1x EV/ replacement value, valuing each JU at USD140m, on par with market.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/1 ... d07d15.pdf
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Re: Velesto Energy (former UMW Oil & Gas)

Postby winston » Wed Mar 13, 2019 9:53 am

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Velesto Energy (VEB MK)
BUY (unch)
TP: MYR0.33 (unch)

FY18 core results were ahead of expectations, largely on higher-than-expected JU utilization in 4Q18 (91% vs. 85% our earlier forecast), which led to Velesto returning to the black (MYR24m core net profit) in the quarter.

Veslesto impaired MYR11m in assets for its oilfield services in China and drilling operations; 2 HWUs (MYR3m) in the quarter.

Our estimates are unchanged. We expect Velesto to be profitable in FY19, averaging an 82% JU utilization (MKE’s break-even estimate: 77%).

A rise in DCR is a major catalyst, we do not discount entirely in FY19. A USD1k rise in DCR will improve Velesto’s net profit by MYR8m p.a.. Our DCR estimate is unchanged, at USD68k for FY19-21.

With improving financials, accelerating its de-gearing plan remains in the cards. Velesto has pre-paid MYR50m of debt in 1Q19 (net gearing level at 43% as at end-Dec 2018).

Maintain BUY with an unchanged MYR0.33 TP, based on 1x EV/ replacement value. We value each JU at USD140m/ unit.

Source: Maybank
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Re: Velesto Energy (former UMW Oil & Gas)

Postby winston » Fri Apr 19, 2019 2:24 pm

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CIMB Research raises target price for Velesto to 32 sen

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.

Source: The Edge

https://www.theedgemarkets.com/article/ ... sto-32-sen
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