KUALA LUMPUR, Dec 5 (Bernama) -- Bursa Malaysia closed lower on Friday amid mixed regional market performance as investors turned cautious over a possible rate hike by the Bank of Japan (BOJ) and upcoming US economic data that may influence the Federal Reserve’s (Fed) interest rate decision next week. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) pared most earlier losses to settle 4.55 points easier, or 0.28 per cent, to 1,616.52 from Thursday’s close of 1,621.07. The benchmark index, which opened 0.37 of-a-point lower at 1,620.70, moved between 1,609.67 and 1,621.25 throughout the day. The broader market was negative, with decliners outpacing advancers 604 to 439. A total of 550 counters were unchanged, 1,151 untraded, and 18 suspended. Turnover declined to 3.17 billion units worth RM2.24 billion from 4.48 billion units worth RM2.75 billion yesterday. Rakuten Trade Sdn Bhd vice-presiden...
Velesto Energy Bhd (KL:VELESTO) is set to deliver stronger operational results in the second half of 2025 (2H2025), but further share price upside appears limited, according to Hong Leong Investment Bank (HLIB). The research house said the recent rally has already priced in higher rig utilisation rates and dividend prospects following Velesto’s capital reduction exercise.
HLIB downgraded the counter to a “hold” from “buy”, citing normalising earnings growth under lower day charter rate (DCR) assumptions for the financial years ending Dec 31, 2026 (FY2026) and FY2027.
Reflecting a more cautious outlook, HLIB trimmed its FY2026 and FY2027 earnings forecasts by 6.2% and 1.1%, respectively, to factor in softer DCR expectations as longer-term contracts increasingly dominate the company’s portfolio.
Stock Performance and Valuation
Velesto’s shares have more than doubled since their April low of 12.3 sen, driven by optimism over rising rig utilisation, the completion of its capital reduction exercise, and potential dividend increases.
At 25 sen on Tuesday morning, the stock was down 0.5 sen or 1.96%, giving the company a market capitalisation of RM2.05 billion. Among analysts, the counter currently holds five “buy” and three “hold” recommendations, with no “sell” calls.
Operational Outlook
HLIB maintained a positive operational view, expecting rig utilisation to reach around 80% in 2H2025, supported by five of Velesto’s six Naga rigs currently under contract.
The company’s RM4.3 billion tender book remains robust, with 87% of bids targeting long-term contracts lasting at least one year.
“We expect blended DCRs to be resilient in 2H2025, while moderating to US$95,000–US$110,000 per day in FY2026f as longer-term contracts dominate,” HLIB said.
Summary
While Velesto’s fundamentals remain sound with high utilisation and stable DCRs, HLIB believes most positives are now priced in, leaving limited room for further re-rating. The near-term outlook points to steady but moderating growth as the company transitions into a more stable contract cycle.
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