Oil support services provider Deleum Bhd, which made an impressive debut on Bursa Malaysia main board last Friday, continued on its winning streak yesterday, with its shares putting on RM1.22, or 29.2%, and closing at the day’s high of RM5.40.

Analysts said the growing demand in the oil and gas (O&G) sector and expectations that the company would clinch more contracts in the second half year drew investor interest to the stock.

An analyst with a local brokerage said he was not surprised at the interest, as investors would continue to watch the company, given the bullish outlook for the O&G sector.

“The current upswing in O&G demand should also benefit the company, which has exposure in the niche subsea production system and the entire gas turbine value chain,” he said.

Deleum’s core business is in the provision of specialised equipment and services such as subsea production systems and gas turbine packages, after sales services including overhaul, maintenance and technical services, the provision of drilling rig operations, and the provision of oilfield chemicals and services.

The company has been servicing large O&G majors, namely Sarawak Shell Bhd, Sarawak Shell Petroleum Co Ltd, Malaysia Deepwater Floating Terminal (Kikeh) Ltd, Petronas Carigali Sdn Bhd, Murphy Oil, Petronas Gas Bhd, ExxonMobil Exploration and Production Malaysia Inc and Talisman.

SJ Securities head of research Cheah King Yoong said he expected the company to continue to perform well given Petroliam Nasional Bhd’s (Petronas) plans to develop several oilfields.

He said O&G players were hoping that Petronas, the beneficiary of the developments in the eastern and northern corridors, would announce project tenders in the second half as the national oil corporation had yet to announce any major contracts so far.

In the eastern corridor alone, Petronas will be unveiling a RM44bil development masterplan that will focus on building new O&G infrastructure and enhancing the area’s existing facilities in anticipation of growing energy demand worldwide.

“Deleum got listed at an opportune time as there is a lot of interest in O&G stocks,” Cheah said, adding that exploration activities had been rising as oil prices stayed high.

He said the counter was attractive as it offered cheaper valuations compared with its peers in the sector.

“At a 18 times price to earnings (PE) ratio, it is fairly cheap considering the industry average PE of 24 times. I believe a lot of investors are seeking to cash in on the boom in the oil and gas industry,” he said.

Cheah believes that Deleum’s net cash position would help the company to secure more projects without stretching its balance sheet.

source news : biz.thestar.com.my