Wednesday, March 06, 2013

Deleum- an attractive O&G stock poised to go

Deleum Bhd is involved in the following business:

- Power and Machinery
- Oilfield Services
- Maintenance, Repair and Overhaul

Power and Machinery segment contributed 94% & 80% of the group's pre-tax profit & revenue, respectively for FY2012.

Recent Financial Results

For QE31/12/2012, Deleum's net profit increased by 11% q-o-q or 87% y-o-y to RM13.5 million while its revenue rose by 25% q-o-q or 46% y-o-y to RM155 million. Bottom-line improved due to Power and Machinery segment recording a RM6.5 million increase in pre-tax profit to RM21.3 million. This is due mainly to retrofit projects and higher dispatch of valves and regulators during the currentquarter on the back of increased exploration and production activities.

The improved results for Power and Machinery segment had more than offset the losses incurred by the Oilfield Services segment of RM1.5 million & by Maintenance, Repair and Overhaul segment of RM0.6 million.

Table: Deleum's last 8 quarterly results

Chart 1: Deleum's last 25 quarterly results

Financial Position

Deleum's financial position is deemed satisfactory as at 31/12/2012. Its current ratio stood at 1.7 times while gearing ratio was negligible at 0.08 time. Cash reserves stood at RM81 million or cash per share of 54 sen.


Deleum (closed at RM2.04 yesterday) is now trading at a PE of 6.8 times (based on EPS of 29.8 sen for FY2012). At this PE, Deleum is deemed attractive.

Technical Outlook

deleum has just broken above the horizontal-cum-psychological resistance of RM2.00. While this breakout, the stock may march to its next resistance at RM2.25.

Chart 2: DEleum's weekly chart as at Mar 4, 2013 (Source: Quickcharts)


Based on good financial performance & position, attractive valuation & positive technical outlook, Deleum is good stock for trading BUy or long-term investment.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Deleum.

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