Hong Leong Upgrades VELESTO to Buy After 50% Slump; NAGA 3 Secures PETRONAS Contract

StockTipRatings · November 5, 2026

Hong Leong Investment Bank analyst Thye May Ting upgraded Velesto Energy to “Buy” from “Hold”, raising her target price to RM0.20 from RM0.19, implying 14.3% upside. Following a share-price decline of more than 50% since early April 2026, she believes much of the downside is already reflected in valuations. A projected 2.5-sen annual dividend, equivalent to a 13.9% yield, brings the estimated total return to approximately 28%.

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Velesto secured a PETRONAS Carigali contract to deploy its NAGA 3 drilling rig for one firm well and one optional well, with operations expected to begin in November. Thye assumes a three-month campaign extending into January 2027 at US$90,000 per day. The additional contribution prompted her to raise 2026 and 2027 core-profit forecasts by approximately 7% and 6%, to RM108 million and RM137.8 million, respectively.

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Thye nevertheless expects regional drilling rates to remain subdued as international rigs entering Southeast Asia intensify competition. Her upgrade reflects improved valuation and dividend appeal rather than an anticipated near-term recovery in charter rates. NAGA 3 also remains a potential disposal candidate following its previously terminated sale.

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As of 9:13 a.m. on November 5, Velesto Energy’s share price fell 2.8% to RM0.175.

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Disclaimer: All content is AI-aggregated from public sources for informational and educational purposes only. StockTipRatings.com does not constitute investment advice. Past performance and historical statistics are no guarantee of future returns.

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