KUALA LUMPUR: Kenanga research is positive on Dayang Enterprise Holdings Bhd
's recent announcement of a RM200-300mil PM-MCM contract from Hibiscus.
"Overall, we are positive on this contract win, highlighting DAYANG’s industry-leading competencies within the offshore maintenance space, and contributing to added earnings visibility for the next five years, with this being the fifth PM-MCM contract secured in 2018 that has been publically announced – summing to a total order book value of roughly RM3b," it said.
"Post-announcement, we made no changes to our FY19-20E numbers, as we deem this contract award to still be within our FY18 replenishment assumption of RM2.3b – implying another 1-2 more FY18 contract wins yet to be announced," said the research house.
It maintained an underperform call on the counter with a target price of RM1.20
To recap, Dayang has been awarded by SEA Hibiscus Sdn Bhd a contract for Pan Malaysia Maintenance, Construction and Modification for 2018 to 2023, fetching EBIT margins within the range of 10-20%.
Kenanga added that Dayang's 60.5%-owned listed subsidiary Perdana has hinted at an impending comprehensive corporate exercise to be completed within the next 12 momnths.
It said this may include the extension of borrowings, disposal of assets, special issues or placement of shares, and rights issue.
"Depending on the scheme, there may also be a need to further impair the group’s assets.
"That said, we do not discount that an upcoming comprehensive corporate restructuring may possibly implicate DAYANG’s shareholders," it added.
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