Deleum, Dividend Yield & Fair Value/Target Price

Deleum Berhad

Deleum Berhad (5132), is a provider of a diverse range of supporting specialized products and services for the oil and gas industry, particularly the exploration and production of oil and gas. Deleum participation in oil and gas industry was dated since 1982.

Three largest shareholders of Deleum are Lantas Mutiara Sdn Bhd, Hartapac Sdn Bhd and Datuk Vivekananthan with total holdings of more than 40 percent.

Deleum is known pay attractive dividend to the shareholders. For the past 3 years the dividend yield stays above 6% which is about 2 times of the current fixed deposit rate.

Unfortunately, there is not many coverage by research house on Fair Value/Target Price for Deleum. The last done was from Alliance in May 2011 whose make a buy recommendation with target price of RM2.07. In February 2011, JF Apex also make buy recommendation with target price of RM1.74.

The table below is the financial summary of Deleum for the past 3 years.

FYE 2008 FYE 2009 FYE 2010
Revenue (RM’000) 425,055 514,293 399,045
Net Profit (RM’000) 23,251 26,450 23,237
PE Ratio (x) 4.56 6.62 6.31
EPS (sen) 23.25 26.45 23.24
Dividend (sen) 11.0 12.0 11.5
Dividend Yield (%) * 10.38 6.86 6.89

*Based on price on last trading day of financial year end

Historically, Deleum pay interim dividend in August & final dividend in February. The last closing price on 6th July 2011 was RM1.62. If Deleum going to pay the similar amount of dividend for 2011, it translate to 7.1 percent dividend yield based on current price.

The main problem with Deleum is the daily trading volume which is rather low.

What do you think about Deleum?

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