Deleum shares up 8% after Q2 net profit rises

KUALA LUMPUR: Shares in Deleum Bhd jumped by 8% in early trade Thursday after the company reported a 37% growth in its second quarter net profit.

The provider of oil and gas-related support services and products rose 8.51%, or eight sen to RM1.02, its highest in about two months.

Deleum’s second quarter to June 30 net profit grew 36.91% to RM9.17mil, from RM6.7mil a year earlier, mainly due to improved trading conditions and changes in the value of the US dollar.

Its quarterly revenue went up 30.84% to RM139.29mil from RM106.46mil on the back of higher revenue from the power and machinery, and integrated corrosion solution segments, offset by lower revenue contribution from oilfield services segment.

Deleum declared a first interim single tier dividend of 1.25 sen, payable on Sept 25. The ex-date is on Sept 7 and the entitlement date is Sept 13.

For the first six months ended June 30, Deleum posted a net profit of RM10.57mil on revenue of RM247.8mil.

MIDF Research is optimistic that Deleum’s earnings would sustain into 2HFY18 as crude oil prices remain relatively stable, activity levels remain at a comfortable level and mobilisation cost for the Pan Malaysia MCM to stabilise.

It added that 3QFY18 and 4QFY18 were generally strong quarters for the company.

“Despite 6MFY18 earnings still failing to hit the halfway point of our FY18 earnings forecasts, we remain optimistic that earnings will continue to be buoyed by high activity levels in 2HFY18.

“The company’s earnings support will still largely be contributed by the power and machinery segment,” MIDF said.

The research house has upgraded Deleum to “buy” with an unchanged target price of RM1.39 per share.

“Our target price is premised on PER19 of 12x pegged to EPS19 of 11.6sen. At peak valuation, the stock traded at PERs in excess of 18x,” it said.