PETALING JAYA: There are positive developments brewing in the oil and gas (O&G) space for Dayang Enterprise Holdings Bhd
to reap stronger earnings this year.
The local O&G players’ core operations in the offshore maintenance, construction and modification (MCM) and hook-up and commissioning (HUC) space are poised to see higher work orders over the next three years, going by Petroliam Nasional Bhd’s planned activity.
CGS-CIMB Research in a report said on average, the national oil company projects annual MCM and HUC work requirements in 2024-2026 to be 13% and 50% higher than the 2023 levels.
These positive developments within the oil services landscape in Malaysia look set to propel Dayang’s earnings to a new record for this year. “We raise our net profit forecasts for financial year 2023 (FY23) by 15% on better-than-expected activity in the fourth quarter of 2023 (4Q23).
“This is despite the monsoon season, coupled with the closing out of several work orders in the final quarter – which typically garner higher margins.”
As a result of the revisions and rolling its valuation one year forward, CGS-CIMB Research said its Gordon growth model-based target price rises to RM4.
“Our revised FY24-FY25 net profit forecasts are currently 28%-49% above Bloomberg consensus estimates,” it added.Potential re-rating catalysts would be higher earnings delivery and dividend payouts.
