Velesto to see good charter rates continuing


Kenanga Research raised its F24 net profit forecast for Velesto by 4%.

PETALING JAYA: Velesto Energy Bhd is forecast to sustain its higher rig utilisation levels and charter rates in financial year 2024 (FY24) after its FY23 results beat analysts expectations.

Its FY23 core net profit of RM100.3mil (versus a net loss of RM100mil in FY22) beat market consensus by some 100%, largely due to higher-than-expected rig fleet utilisation rate (83%) and contained operating costs while the average daily charter rate (DCR) rose to US$94,000 from US$77,000.

This more than covered the higher operating, depreciation and finance costs the company faced.

“Currently, all six of the company’s rigs are in use but five are scheduled to conclude their current charters in the first half of FY24.

“This scenario presents an opportunity for the company to secure new charters, potentially at higher DCR, considering the strong market demand for jack-up rigs.

“Also helping is stabilising labour cost,” Kenanga Research said in a report on the upstream support services provider.

The research house upgraded the counter to “outperform” and raised its target price (TP) to 31 sen from 26.5 sen following the strong FY23 numbers.

It raised its F24 net profit forecast for Velesto by 4% after taking into account an average DCR and utilisation assumptions of US$119,000 and 84%, respectively.

Kenanga Research’s FY25 forecast for Velesto also assumed an average DCR of US$122,500 and utilisation of 87%.

Meanwhile, CGS International Securities Malaysia Research, has an “add” call on Velesto with a TP of 31 sen a share.

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