Velesto Energy Berhad has been maintaining a steady course despite market fluctuations. Following a recent visit to the Naga 2 jack-up drilling rig, analysts have revised their earnings projections slightly, adjusting FY24-26 estimates by 0% and -5% respectively due to anticipated softness in the rig market.

The updated target price of RM0.32 reflects a marginal decrease of 1 cent, maintaining a 13x mid-FY25E EPS valuation. Analysts retain a BUY call on the stock, highlighting Velesto as a top pick within the sector.

The Naga 2 rig, operational since 2009 and currently undergoing its third Special Periodical Survey at Seatrium's yard, has demonstrated solid performance across Indonesia, Vietnam, and Malaysia. It remains a robust asset, capable of drilling in water depths up to 350 feet and up to 30,000 feet deep. With its strong contract portfolio, including long-term agreements for several rigs through early 2026 and potential new contracts on the horizon, Velesto is well-positioned to weather any client capex deferment impacts.

Analysts remain optimistic about Velesto's growth prospects, forecasting a significant 53% increase in EPS for FY25 and affirming the stock's favourable risk-to-reward ratio.