PETALING JAYA: Deleum Bhd
’s oilfield integrated services (OIS) segment is expected to remain the group’s key earnings growth driver, according to Hong Leong Investment Bank (HLIB) Research.
This would be supported by newly secured slickline contracts and improving maintenance, construction and modification (MCM) activities.
The OIS segment contributes about 34% of Deleum’s RM2.4bil order book, with the remaining 66% by the power and machinery (P&M) segment.
HLIB Research expects the OIS segment’s momentum to remain intact in the second half of financial year 2026. It said slickline services are expected to remain the key growth driver for the segment.
“The group incurred one-off startup costs of about RM4mil in the first quarter of financial year 2026 (1Q26) related to System Integration Testing (SIT) for newly secured slickline contract clients.
“With the SIT phase completed, no further startup costs are expected going forward, while revenue contribution from the contract is anticipated to commence in 3Q to 4Q26,” the research house said in a note.
As for the P&M segment, activities are expected to remain soft in 2Q to 3Q26, primarily due to lower valve supply, installation, repair and maintenance works.
This is largely due to delayed turnaround activities in Pengerang as refinery supply remains tight following disruptions arising from the Middle East conflict. “Nevertheless, we expect activity levels to gradually recover towards end-financial year 2026 (FY26) to early FY27,” it said.
It maintained its “buy” call on the counter and target price of RM1.68 per share. It said Deleum offers an attractive dividend yield, supported by its 50% dividend payout policy, wth an undemanding valuation.
