Phillip Capital Research noted that Dayang is bidding for two contracts worth RM300mil.
PETALING JAYA: Dayang Enterprise Holdings Bhd
’s earnings prospects are expected to remain solid, underpinned by strong work orders and better vessel utilisation.
Phillip Capital Research expects the offshore services company to deliver a stronger result for its first quarter ended March 31, 2024 (1Q24), with a projected net profit rebound ranging between RM20mil and RM30mil, reflecting between 9% and 13% of the research house’s 2024 earnings forecast.
The turnaround is anticipated following a challenging 1Q23, where Dayang incurred a RM16mil net loss due to project delays impacting vessel availability, resulting in a lower vessel utilisation rate of 26%.
The research firm expects Dayang to show an enhanced performance, driven by favourable market conditions and increased vessel utilisation.
“We expect earnings to pick up sequentially in 2Q24 and 3Q24, backed by seasonally stronger work orders and utilisation. The tight vessel market should continue to support the high daily charter rates, which are set to benefit Dayang,” it noted.
Looking ahead, Phillip Capital Research highlighted Dayang’s potential for new contract wins and revenue growth.
It said Dayang aims to secure additional work boats and accommodation work barges in preparation for increasing work orders from PETRONAS Carigali Sdn Bhd anticipated to begin by 3Q24.
The research firm said the work, valued at about RM1.2bil, could contribute between RM250mil and RM350mil in annual revenue to Dayang.
Moreover, it said Dayang is waiting for the results of PETRONAS’ integrated hook-up and commissioning and maintenance, construction and modification packages.
The award announcement for these contracts is anticipated by the end of this year.
“As an established player, Dayang is well-positioned to secure a portion of the 18 available packages,” the research house noted.
Additionally, Phillip Capital Research noted that Dayang is bidding for two contracts worth RM300mil involving engineering, procurement, construction, transportation, installation and hook-up, commissioning services and platform decommissioning.
Although specific contract values were not disclosed, the research outfit estimated that around 50 platforms will be decommissioned, with an average value of approximately RM50mil per platform.
Phillip Capital Research reiterated its “buy” call on the stock and raised its target price to RM3.30 per share, up from RM2.70.
“We remain positive on Dayang’s earnings prospects, supported by increased domestic activity and improved charter rates,” the research house said.
