Oil and gas challenges clouds Dayang’s outlook

PETALING JAYA: A challenging oil and gas (O&G) landscape will continue to influence Dayang Enterprise Holdings Bhd’s outlook, with a decline in the benchmark Brent crude oil price and vessel downtime among the risks.

Hong Leong Investment Bank (HLIB) Research, which has maintained a “buy” rating, albeit with a reduced target price (TP) of RM2.01 from RM2.67, emphasised in a report to clients: “We expect Dayang’s earnings to remain resilient, supported by the seasonal post-monsoon recovery.”

However, it remains cautious on Dayang’s near-term earnings outlook amid capital expenditure cuts from Petroliam Nasional Bhd but highlighted Dayang’s robust order backlog of RM5.1bil for multi-year visibility.

In contrast, Kenanga Research upheld an “underperform” rating, lowering its TP to RM1.44 from RM1.56, citing “weak upstream activity outlook amid a soft macro backdrop,” including tepid crude oil prices and the Petronas-Petroleum Sarawak Bhd (Petros) gridlock.

This could slow topside maintenance services (TMS) work orders and marine utilisation to between 50% and 60% for the financial years ending Dec 31, 2025 (FY25) and FY26.

A first interim dividend per share of seven sen exceeded Kenanga Research’s expectations, implying a 5% FY25 yield.

On the other hand, HLIB Research cut earnings forecast for FY25 to FY27 by 17%, 18% and 10% respectively on lower vessel utilisation and margins, as Kenanga Research also reduced its FY25 and FY26 earnings projections for Dayang by 26%/8%, adjusting TMS revenue to RM910m/RM900m.

Risks include Brent price declines and vessel downtime, but dividends remain sustainable.

Overall, HLIB Research sees recovery potential, although Kenanga Research warns of a shallow downcycle, advising caution on upstream services.