Phillip Capital Research is positive on the contract win as Dayang continues to benefit from favourable daily charter rates amid a tight vessel supply in the market.
PETALING JAYA: Dayang Enterprise Holdings Bhd
’s recent contract win is estimated to contribute about RM15mil to RM17mil in earnings, based on a 20% net profit margin.
This will account for approximately 5% of the company’s net profit for 2025, according to Phillip Capital Research.
The brokerage is positive on the contract win as Dayang continues to benefit from favourable daily charter rates (DCR) amid a tight vessel supply in the market.
Dayang reported receiving work order awards for six of its accommodation workboat vessels from PETRONAS Carigali Sdn Bhd.
While no official contract value was disclosed, Phillip Capital estimates the combined contract value to be between RM75mil and RM85mil.
The research house maintains its “buy’’ call on the stock, with a target price (TP) of RM4.50 per share, based on an unchanged 16 times price-earnings ratio multiple on projected 2025 earnings per share (EPS).
Meanwhile, Kenanga Research noted that the recent contract win was within its expectations.
The brokerage maintains its earnings forecast and TP of RM3.80 per share, with an “outperform’’ call on the stock.
Kenanga Research has already factored in the potential upside for Dayang’s vessels, as well as its subsidiary Perdana Petroleum Bhd, projecting improvements in DCR for financial year 2024 (FY24) and FY25.
This is expected to result in EPS growth of 37% for FY24 and 135% for FY25.
Additionally, this development helps alleviate near-term concerns over a potential slowdown in upstream maintenance activities in Sarawak, following news reports on recent discussions between Petroliam Nasional Bhd (PETRONAS) and Petroleum Sarawak Bhd that surfaced in July 2024.
With an order book valued at RM1.4bil, Dayang has more than sufficient runway to sustain its topside maintenance work orders in FY24.
This year will also mark the tail-end of the yearly extension of its previous umbrella topside maintenance and hook-up and commissioning contracts with PETRONAS and other clients.
Kenanga Research believes that the next round of umbrella contracts could be awarded by the end of FY24.
If not, Dayang is likely to secure extensions for its maintenance works due to the expected high demand.
The research house likes Dayang for its sustained ramp-up in upstream maintenance activities, as well as the anticipated expansion in project margins due to better contract terms secured.
The company’s net cash balance sheet allows for more potential expansions and its marine division is set to benefit from the ongoing boom in the offshore support vessels sector.
