Public Investment upgrades Dayang to ‘Outperform’


PUBLIC Investment Bank Research has upgraded its rating for Dayang Enterprise Holdings Bhd, Sarawak-based oil and gas services provider, to ‘Outperform’ with an unchanged target price of RM1.15.

The research house said it foresees the group’s earnings picking up from the second quarter of 2022 (2Q22) onwards in tandem with higher activity levels post-monsoon season.

The group also recently bags a contract for the provision of maintenance, construction and modification works for Vestigo Petroleum Sdn Bhd.

This project is Dayang’s first contract for the financial year 2022 (FY22) that will maintain its balance orderbook at RM2 billion.

Under the contract, they work primarily on the development and production activities from small, marginal and mature fields in Malaysia and abroad.

The contract is for 18 months, effective from Feb 25, 2022, until July 16, 2023, and will contribute positively to the group earnings.

“While the contract value was not specified, as it is based on work orders issued by the client at a fixed schedule of rates, however, upon completion, we estimate this contract will contribute within the range of RM60 million to RM90 million to the group’s top line.

“We are optimistic over the contract as it reflects the restart of overall work activities and indicates that the oil and gas (O&G) sector is recovering after declining earnings in 2021,” he said.

The group said this contract will also enable them to increase utilisation of its vessels to 70% hence improving profit margin.

“We keep our earnings forecast unchanged as we have assumed this under our replenishment on work order assumption of ~RM200 million per year.

“We believe O&G activities will be more significant this year as oil majors are currently expediting some of the works postponed in 2021 amid the current strong oil price environment at above US$100 per billion barrels of petroleum liquids,” the report noted.

Moving forward this year, the research predicts that group earnings would gradually improve, due to the restoration of higher worker capacity, relaxation of standard operating procedures with no obligatory 14-day quarantine, in addition to the stronger work flows.


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