Dayang exceeds expectations, robust work order outlook

KUCHING (Aug 26): Dayang Enterprise Holdings Bhd (Dayang) exceeded expectations for its financial performance during the first half of the year (1H24), driven by stronger-than-expected performance in its offshore topside maintenance (TMS) and marine divisions.

Its prospects have also been viewed positively with an expected robust work order outlook.

In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) pointed out that on a year-on-year (y-o-y) basis, its 1HFY24 revenue rose by 68 per cent, driven by stronger TMS revenue from higher recognition of work orders and increased marine revenue due to higher vessel utilisation (75 per cent vs 50 per cent last year) and improved daily charter rates (DCR).

As a result, core profit surged by 230 per cent y-o-y, with TMS margins improving due to better terms offered for the execution of its topside maintenance jobs.

“With an order book valued at RM1.4 billion, the company has more than sufficient runway to sustain its topside maintenance work orders in FY24 which will also mark the tail-end of the yearly extension of its previous umbrella topside maintenance and hook-up & commissioning (HUC) contracts from Petronas and other clients.

“We believe that the next round of umbrella contracts could be awarded by the end of FY24, and if not, Dayang is likely to secure extensions for its maintenance works due to the expected high demand,” Kenanga Research opined.

All in, it said: “We like Dayang due to the sustained ramp-up in upstream maintenance activities as well as the anticipated expansion in project margins due to better contract terms secured, its net cash balance sheet allowing for more potential expansions, and its marine division set to benefit from the boom in OSV upcycle.”

As such, it maintained its ‘outperform’ rating on the stock.