New Dayang charters to add RM6mil in profit

PETALING JAYA: Analysts are upbeat on Dayang Enterprise Holdings Bhd’s earnings outlook following its latest win from Petronas Carigali Sdn Bhd (PCSB).

The group, via its subsidiary DESB Marine Services Sdn Bhd, had received three work orders from PCSB for the provision of three units of accommodation work boats – namely Opal, Zamrud and Ruby. 

According to Kenanga Research, the respective start dates are slated for Jan 23, Feb 7 and Feb 20, 2025, with charter durations ranging from 1,005 days to 1,043 days. 

Although the contract value was not disclosed, Kenanga Research considered the award to be in line with expectations.

”Based on recent market benchmarks, we estimate the secured charters could be priced at a conservative daily chartered rate (DCR) of RM80,000.

“This is consistent with our existing assumptions of 82% vessel utilisation and DCR of RM81,000 for accommodation work boats,” said the research house. 

With an assumption of a 26% net margin, Kenanga Research projected that each charter could contribute at least RM6mil in profit after tax annually, and “further strengthening Dayang’s earnings visibility heading further into the financial year of 2025 (FY25)”. 

“The award reinforces Dayang’s strong position in the maintenance-focused offshore support segment and supports its vessel utilisation outlook in FY25,” Kenanga Research added.

CIMB Research also believes that if the estimated average DCR is approximately RM80,000 per day and all extension options are exercised, the total value of the three work orders could reach a maximum of RM444.4mil.

It added that this could yield an annual revenue of RM88.9mil and a net profit of RM17.8mil, assuming a 20% net profit margin, accounting for approximately 7% to 8% of its current FY25 to FY27 earnings projections.

The research house views the award to be positive for the group as it provides earnings visibility over the next five years, and allows Dayang to sustain its FY24 vessel utilisation rate of 68% in FY25. 

“Despite the estimated DCRs coming in at the lower end of current DCRs, we believe they remain compelling at 15% to 60% of the 2022 level of around RM50,000 to RM70,000 per day range,” it added.

“Furthermore, we maintain our earnings forecasts as we have factored these work order wins into our earnings projections.” 

CIMB Research said Dayang’s earnings outlook will be supported by the RM4bil-worth of three 10-year contracts for the maintenance, construction, and modification and hook-up commissioning for the first five years. 

The RM1.2bil asset integrity findings contract provides further support, albeit on a limited scale, due to the lack of vessel availability in the market.

Meanwhile, its marine segment is expected to remain stable, supported by utilisation rates of around 70% in FY25 and healthy DCRs amid tight market supply. 

CIMB Research maintained a “buy” call on Dayang with an unchanged target price of RM2.78 per share. 

The recommendation was attributed to its “compelling valuation, solid exposure, proven expertise in brownfield maintenance, potential upside from higher DCRs amid tight market supply and strong net cash position”.

Kenanga Research, on the other hand, maintained an “outperform” call on the group at a target price of RM3.39.