MY : Velesto Energy Berhad - Operating costs hurt more than expected

9M21 core net loss underperformed at 150%/110% of our/consensus FY21F forecasts due to higher-than-expected opex in 3Q21 on multiple factors. Consequently, we cut our FY21-23F forecasts, reduce our DCF-based TP to 14 sen (Ke: 15.3%, rolling forward to end-CY22F), and downgrade to Hold. Despite rising utilisation rates, a difficult operating environment has impacted Velesto over multiple quarters, heightening the risks to investors in the name.