HLIB: Dayang Enterprise’s performance in 1Q22 to be subdued


HONG Leong Investment Bank Bhd (HLIB) expects Dayang Enterprise Holdings Bhd’s performance for the first quarter of 2022 (1Q22) to be soft due to the ongoing monsoon season.

In its recent meeting with the group’s representative, the investment bank stated the Dayang team guided on the group’s plan to turnaround its 63.7%-owned Perdana Petroleum Bhd this year as it aims to hit a higher blended fleet utilisation rate of between 60% and 65%.

“We believe things would only pick up in 2Q22 for Perdana as the group will still be pretty much affected by the monsoon season and other headwinds in 1Q22.

“The group is targeting a blended fleet utilisation rate of c.35% in 1Q22 and c.80% in 2Q22. We noted that Perdana’s fleet utilisation stood at 49% in the financial year 2021 (FY21) and 53% in FY20,” HLIB stated in a research report on Dayang yesterday.

The bank added that Dayang expects a much better year compared to last year due to less Covid-19 related headwinds among which include less stringent Covid-19 standard operating procedures and shorter crew turnaround days (from lower quarantine time).

The oil and gas support service provider highlighted its current outstanding orderbook to be at RM1.9 billion, which will provide earnings visibility until end-FY23. The company also has a tenderbook of RM500 million to RM600 million.

HLIB maintained a ‘Hold’ call on Dayang with a target price of 89 sen.

“While we appreciate the group’s initiative and efforts to turnaround Perdana Petroleum, we think this strategy will require some time to accomplish.

“Given the nature of the business to be seasonally impacted by the bad and rainy seasons, we expect Dayang’s performance for the quarter (1Q22) to be soft due to the ongoing monsoon season.

“However, we expect the group’s performance to pick up from 2QFY22 onwards,” HLIB stated.