CGSI Research views the strong performance by Perdana as a positive read-through for Dayang.
PETALING JAYA: Dayang Enterprise Holdings Bhd
’s full year earnings are expected to surprise on the upside, taking a cue from the strong results of its 64%-owned subsidiary Perdana Petroleum Bhd.
Perdana reported record-high second quarter 2024 (2Q24) results, posting a 26% rise in revenue driven by higher vessel utilisation while normalised net earnings more than doubled to RM33.8 million in 2Q24.
“We view the strong performance by Perdana as a positive read-through for Dayang,” said CGS International Research (CGSI Research).
The research house added that the still buoyant outlook for offshore supply vessels, higher work orders for Dayang’s core operations in 2Q and 3Q and incremental revenues from the commencement of PETRONAS contract from May, will further drive Dayang’s earnings growth.
“Our current projections imply normalised net profit growth of 36% for 2024 and a further 30% in 2025 for the group. Our net profit forecasts for 2024 and 2025 are currently 5% and 23% , respectively, ahead of Bloomberg consensus estimates,” the research house said.
It maintained its “add” call on the counter with an unchanged target price of RM4.
“Dayang remains one of our top picks in the Malaysian oil and gas sector and broader market. While its share price is up 84% over the past year, outperforming the FBM KLCI (14% gain) and KL Energy Index (up 15%), we see further upside potential,” the research house said.
It believes that the group’s strong earnings prospects have yet to be adequately priced in at current levels.
“Valuations look undemanding to us, with the stock trading at an ex-cash 2025 price-earnings multiples of 7.2 times, a 37% discount to its 10-year mean of 11.5 times for a company offering robust earnings growth, excellent track record in brownfield oil and gas maintenance services and dividend yields of 4% in FY25, which is backed by a strong net cash balance sheet,” CGSI Research added.
