PETALING JAYA: Dayang Enterprise Holdings Bhd
’s asset integrity findings (AIF) contract win could potentially be worth up to RM1.2bil from PETRONAS Carigali Sdn Bhd, says RHB Research.
“Although the value of the contract will be based on work orders to be issued by the client and will also be subject to the outcome of scoping work to be done, we have been guided that it is estimated to be worth up to RM1.2bil or RM400mil per annum,” it added.
On Jan 5, Dayang said its wholly-owned subsidiary company, Dayang Enterprise Sdn Bhd, has been awarded a three-year contract for the provision of rectification works and associated services for AIF – Package A – Sarawak Oil Asset (SK Oil).
The company did not state the value of the contract but said it will be based on work orders to be issued by PETRONAS Carigali throughout the contract duration.
The research house has maintained a “buy” call with a target price of RM2.47 based on 16 times financial year 2024 price-earnings ratio.
It said the contract win is positive for Dayang, as it reflects the company’s position as a reliable maintenance services provider.
“Such a win is also in line with Petroliam Nasional Bhd’s (PETRONAS) guidance in its recent Activity Outlook Report 2024-2026, whereby an average of 300 facilities improvement plans per annum are to be carried out in the next three years including rejuvenation projects, gas generator change-out activities and other major maintenance activities.”
RHB Research added said such activities will be carried out to sustain the production volume and operability of assets, while playing a crucial role in curbing flaring activities at new onshore facilities.
“Overall, we expect maintenance work orders to remain resilient in 2024.
“We believe the company stands a good chance of winning a portion of the new tender for PETRONAS’ five-year hook-up commissioning as well as construction and modification (MCM) contracts, with another 3+2 years of extension options,” it said.
RHB Research noted that these contracts exclude marine spreads and it will not affect the work orders from ongoing MCM jobs.
“We estimate the project margins to be similar to that of MCM contracts, and lower than the blended operating margin for the offshore topside maintenance services segment, i.e. at 33% in the nine-month period of 2023,” it said.
RHB Research has maintained its earnings estimates for Dayang as it remained conservative with RM500mil expected from the contract since the actual work orders would still be subjected to the scoping outcome and final approval by the client.
