The research house maintained its “sell” call on Velesto at a target price of 19 sen.

While HLIB viewed Velesto’s several job awards this year as positive, it said those developments were well-expected and have already been imputed into the company’s forecast.

On the other hand, HLIB raised concerns about Velesto’s fundamentals.

“We believe that Velesto’s valuations have become inflated and have surpassed its underlying fundamentals, even considering its promising prospects for a turnaround and future growth,” noted HLIB.

In an announcement yesterday, Velesto said the group – through Velesto Drilling Sdn Bhd – had been awarded a contract for the provision of a jack-up drilling rig from Vestigo Petroleum Sdn Bhd.

Velesto Drilling is wholly owned by Velesto Malaysian Ventures Sdn Bhd, a subsidiary of Velesto Energy.

Vestigo, a wholly owned unit of Petronas Carigali Sdn Bhd, focuses on development and production activities on small, marginal and mature fields locally and abroad.

The contract, which involves the drilling of five firm wells using the group’s Naga 2 jack-up rig, is estimated to begin in the fourth quarter of the 2023 financial year.

Velesto’s order book stood at RM1.3 billion as of April this year.

As of noon, Velesto’s share price remained flat at 23 sen, valuing the company at RM1.85 billion.