Deleum – is the market wrong in pricing a collapse of crude oil price

As an oilfield services group, Deleum’s performance is closely tied to crude oil prices. It improved when oil prices were high, but deteriorated during low-price periods (2015-2019).

Recent years have seen a performance rebound due to better oil prices. Over the cycle, the Group delivered average returns that were greater than its cost of funds. The Group is also financially sound.

My valuation based on the performance over the cycle showed that there is more than a 30% margin of safety based on the market price of RM1.29.

Do you believe that crude oil prices will continue to be high or is due to collapse? I think the market is pricing Deluem anticipating a collapse in the crude oil price. Is this realistic?