Upbeat on Dayang securing contracts for six AWBs

KUCHING (Oct 8): Analysts are upbeat on Dayang Enterprise Holdings Bhd (Dayang) After it announced that its wholly-owned subsidiary, DESB Marine Services Sdn Bhd (DMSSB), has received work order awards from Petronas Carigali Sdn Bhd for six of its accommodation workboat (AWB) vessels.

These include Dayang Pertama, Berlian, Zamrud, Opal, Perdana Liberty, and Sovereign. The duration of these contracts varies from two to five months, although no contract values were disclosed.

This batch of contracts is part of the panel contractor arrangement for offshore support vessels (OSV) awarded by Petronas Carigali in August 2024, said analysts with Phillip Capital Sdn Bhd (Philip Capital) in an analysis today.

“The AWB fleet includes vessels with capacities of 169, 189, and 197 persons,” it detailed.

“Based on our channel checks, the current spot daily charter rates (DCR) for AWBs of these capacities ranges between RM120,000乏M130,000.”

Phillip Capital’s back-of-envelope calculations estimates the total contract value to be at RM75 million to RM85 million.

Assuming a 20 per cent net profit margin, the research team estimate the earnings contribution from these contracts to be RM15 million to RM17 million, accounting for circa five per cent of its existing 2025 net profit forecasts.

“We are positive on the contract win as Dayang continue to benefit from favourable daily charter rates (DCR) amid tight vessel supply in the market.

“We make no changes to our earnings forecast as we deem this contract win within our assumptions.

“We remain positive on Dayang’s outlook, driven by increased offshore activities, higher service and vessels rates, as well as improved vessel utilisation.”

Meanwhile, the team at Kenanga Investment Bank Bhd (Kenanga Research) deemed this to be well within its expectations as it had already factored in upside for Dayang’s vessels, as well as its subsidiary, Perdana Petroleum Bhd.

It projected DCR improvements for both FY24 and FY25, resulting in expected earnings per share (EPS) growth of 37 per cent and 135 per cent, respectively.

“Additionally, this development helps alleviate near-term concerns over a potential slowdown in upstream maintenance activities in Sarawak following the news of Petronas-PETROS discussions that surfaced in July 2024.

“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 and 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.”