PETALING JAYA: Deleum Bhd
’s new contract with PETRONAS Carigali Sdn Bhd to service solar turbine turbomachinery is set to provide a lift its power and machinery (P&M) segment.
In a note to clients, MBSB Research said that based on Deleum’s latest quarterly report, the P&M segment was the group’s largest revenue contributor, accounting for 73% of total revenue for the nine-month period of financial year 2025 (9M25).
The remaining contribution came from the oilfield integrated services (OIS) segment.
The six-year contract was secured through Deleum’s 90%-owned indirect subsidiary, Turboservices Sdn Bhd, to service solar turbine turbomachinery for PETRONAS Carigali, the exploration arm of Petroliam Nasional Bhd (PETRONAS).
The agreement also includes the option for a three-year extension.
However, Deleum did not disclose the contract’s value.
“Currently, the P&M (segment) is seeing rather tepid growth, stemming from the challenging market environment in the domestic upstream oil and gas industry, as crude oil prices are expected to remain low, impacting capital expenditure.
“With the latest contract announcement, this will provide the major boost needed for the segment, in our view,” MBSB Research said.
The research house noted that Deleum currently had an order book of RM1.51bil, providing visibility for the next 1.5 years.
Of this order book, 79% comprises OIS projects, while the remaining 21% is from the P&M segment.
“Furthermore, there are RM492mil worth of tendering projects with a hit rate estimated at 50%.
“Our back-of-the-envelope calculation shows that Deleum’s order book might enlarge to RM1.8bil after factoring the possibility of contract secured from the current tender book,” it added.
While it is positive on the new contract win, MBSB Research made no changes to its earnings estimates as the contract value has not been disclosed.
“We maintain a ‘buy’ call on Deleum with an unchanged target price of RM1.92, pegging to a price-to-earnings (ratio) of 9.5 times 2025 earnings per share of 20.8 sen.”
It added that mergers and acquisitions may provide another catalyst for the stock.
“To drive growth in emerging markets, particularly in South-East Asia, the company is strategically pursuing compelling acquisition opportunities.
“Management has emphasised its commitment to identifying undervalued companies that can seamlessly integrate and enhance synergies with existing operations,” MBSB Research said.
Shares of Deleum were trading at RM1.23 at the time of writing, down 12% year-to-date.
At this price, its market capitalisation stood at RM493.91mil.
In the third quarter ended Sept 30, 2025 (3Q25), Deleum’s net profit declined 11.9% year-on-year (y-o-y) to RM22.09mil, largely due to reduced contributions from its P&M segment and higher operating expenses.
Operating expenses rose 22.1% y-o-y to RM64.09mil, while finance costs more than tripled to RM601,000 from RM163,000.
Revenue for the quarter, however, increased 3.3% y-o-y to RM278.07mil, driven by stronger activity in the OIS segment, particularly from increased slickline, specialty chemical and maintenance services.
Deleum’s net profit declined 4.6% y-o-y to RM54.08mil for 9M25, even as revenue climbed 5.8% to RM694.37mil.
