MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained its BUY rating on Deleum Bhd with a target price of RM1.64 after its 86.7%-owned subsidiary, Deleum Technology Solutions Sdn Bhd (DTS), secured two new contracts from Petronas Carigali Sdn Bhd.

The two contracts, for the offshore maintenance, construction, and modification (MCM) as well as hook-up and commissioning (HUC) services, are set to span five years, with extension options for an additional three-year term and subsequently a two-year term.

These new agreements, which cover MCM services for Peninsular Malaysia's offshore assets and HUC services for assets in Sarawak, further strengthen Deleum's position within the energy infrastructure and offshore service sector.

This development also signals robust demand within Malaysia's oil and gas (O&G) services sector, a favourable environment that positions Deleum to benefit from steady revenue growth and strengthen its market presence. The sustained need for MCM services in particular demonstrates the critical role of ongoing maintenance in prolonging offshore equipment life and supporting production stability.

The contracts further bolster Deleum's growth trajectory, following an RM105 million MCM service contract from Petronas Carigali awarded to DTS in June 2024. This steady flow of awards underlines Deleum's resilience in Malaysia's upstream O&G sector, with continued demand for its offerings in offshore engineering and maintenance.

However, these contracts come with inherent risks, including those related to occupational safety, execution, manpower availability, material costs and broader geopolitical and economic conditions. Nevertheless, DTS's established expertise in managing complex offshore projects — including blasting, painting and piping fabrication — positions it well to address these challenges effectively.