PETALING JAYA: Dayang Enterprise Holdings Bhd
may return its excess cash to its shareholders via a special dividend, without compromising balance sheet strength or growth flexibility.
In a note to clients, CGS International (CGSI) Research estimated that the excess cash could fund a special dividend of 18 sen per share, which translated to a dividend yield of 11%.
“Using our 2025 net cash forecast of RM640mil, and assuming a prudent RM300mil buffer, and two newbuild vessels (RM130mil capital expenditure each and 50% debt-funded), we estimate excess cash of about RM210mil.
“While our base-case of a 65% payout (dividend of 11 sen) remains unchanged, this analysis highlights the group’s ability to return excess cash to shareholders, enhancing capital efficiency and return on equity.
“Even after the distributions, we expect Dayang to continue generating surplus free cash flow in 2026 to 2027, rebuilding net cash and maintaining flexibility for further distributions or growth,” it said.
CGSI Research, which maintained its “add” call on the stock, said Dayang has clear capital management upside potential, given its overcapitalised balance sheet and growing net cash position.
This is supported by robust free cash flow and limited capital expenditure needs beyond maintenance and selective fleet rejuvenation.
“We expect Dayang’s earnings to remain resilient in 2026, underpinned by normalised workflow post the 2025 transition year and a recovery in offshore support vessel utilisation.”
This is despite the softer offshore maintenance, construction and modification (MCM) prospects as suggested by Petroliam Nasional Bhd or PETRONAS’ 2026 to 2028 Activity Outlook, largely due to weaker activity in Peninsular Malaysia.
CGSI Research expected Dayang’s future earnings growth to be anchored by Sarawak, where planned MCM activity is projected to stay elevated over the next three years – relative to 2024 levels.
“We expect Sarawak to account for 78% of Dayang’s RM4.9bil order book as of the third quarter of financial year 2025.
“We expect operational execution to normalise as the group moves past the 2025 transition year under the new Pan Malaysia contract, supporting more stable margins.
“We see room for its offshore support vessel earnings to recover on higher vessel availability at 64%-owned Perdana Petroleum Bhd with the completion of dry-docking activities in 2025.
“While timing of new awards remains uncertain, ongoing hook-up and commissioning tenders and unawarded decommissioning projects provide incremental upside to our base case,” it said.
It noted that Dayang’s valuations are undemanding and that the stock is trading near the bottom of its 12-year valuation range. This suggested that the muted earnings outlook is priced in.
“While its operating climate remains soft with lingering uncertainty from the PETRONAS-Petros dispute – its fundamentals are intact, anchored by a niche brownfield maintenance franchise.”
