PETALING JAYA: Expectations of a special dividend from the planned sale of the Naga 3 jack-up rig could be a key re-rating catalyst for Velesto Energy Bhd
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This comes amid a fresh upstream capital expenditure upcycle led by Petroliam Nasional Bhd (PETRONAS), according to CGS International (CGSI) Research.
Velesto is expected to complete the sale of the Naga 3 rig for US$63mil by mid-2026 and believes proceeds from the disposal could be distributed to shareholders through a three sen special dividend per share (DPS), it said.
In addition, CGSI Research expects another three sen special dividend to be funded via issuances under Velesto’s RM1bil sukuk wakalah programme established in March 2026.
Combined with the group’s ordinary dividend, the research house has raised its financial year 2026 (FY26) DPS forecast to nine sen from three sen previously.
“In total, we lift our FY26 DPS forecast from three sen to nine sen after including the six sen special DPS.
“Although from FY27 onwards, we expect the annual DPS to return to three sen,” CGSI Research added.
It reiterated its “add” recommendation on Velesto, while raising its discounted cashflow-based target price to 32 sen.
Meanwhile, CGSI Research believes the ongoing US-Iran conflict could support even higher oil prices for longer, as countries move to rebuild inventories and diversify supply sources away from the Middle East.
This, in turn, could incentivise PETRONAS to accelerate exploration and development activities, potentially driving higher upstream spending and boosting demand for offshore drilling services in Malaysia.
It also noted that Velesto appears to be actively optimising its rig portfolio.
