Quick take: Dayang jumps 27% on return to the black

KUALA LUMPUR: Dayang Enterprise Holdings Bhd saw its shares take-ff today after the company announced that it returned to the black in FY18 as fourth earnings strengthen on higher work orders.

The counter surged 27.04%, or 21.5 sen to RM1.01. It is currently the most active counter with 65.4 million shares traded.

Dayang returned to the black in its financial year ended Dec 31, 2018, after its final quarter of the year raked in a net profit of RM97.72mil compared with a net loss of RM55.21mil in the

previous corresponding quarter.

This is mainly due to higher work orders received and performed under its topside maintenance contracts.

Its quarterly revenue jumped 64.9% to a record high of RM285.65mil from RM173.26mil in the previous year, despite the fourth quarter being a typically weak quarter due to the monsoon weather.

For the full financial year ended Dec 31, 2018, Dayang posted a net profit of RM164.22mil compared with a net loss of RM144.89mil, while revenue rose 34.9% to RM937.64mil from RM694.99mil in FY17.

MIDF Research said  Dayang’s cumulative normalised FY18 earnings registered a profit of RM164.2mil, beating the house and consensus’ expectation by over 105% respectively.

It said the growth in revenue was mainly attributable to higher work orders received and performed under the topside maintenance services during the quarter.

“The company also disclosed after securing a larger portion of the Pan MCM contracts estimated at RM1.5-2.0bil for the next five years, this brings its total orderbook to RM3.0bil lasting the company through to 2023,” MIDF said.

The research house has maintained its FY19F earnings estimate at this juncture as it await for further announcements on the debt restructuring for Perdana Petroleum under the Corporate Debt Restructuring Committee (CDRC) of Bank Negara which is still in progress.

“We are reiterating our ‘buy’ recommendation on Dayang with an unchanged target price of RM1.30 per share,” MIDF said.

It added that its buy recommendation was premised on large potential share upside, improving operating climate with higher activity levels and improving UR and improving conditions for Perdana Petroleum

“Our valuation is premised on PER19 of 12x pegged to EPS19 of 10.8sen. Our target PER is based on the company’s two-year historical average PER,” it said.

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