Analysts anticipate Dayang to secure more more contracts by year end
KOTA KINABALU: Analysts expect Dayang Enterprise Holdings Bhd (Dayang) to nab another one or two more contracts before the year end, having secured its fourth contract win for the year.
In a report, Kenanga Investment Bank Bhd’s research arm (Kenanga research) saw that the newest contract win by Dayang is a provision of Pan Malaysia maintenance, construction and modification (MCM) contract from JX Nippon Oil and Gas Explore Malaysia Ltd (Nippon).
The five-year contract is estimated to carry a total value between RM100 million to 200 million which Kenanga Research said would bring Dayang’s year to date wins to circa RM1.2 billion.
“We reckon this is an extension to Nippon’s prior topside major maintenance contract awarded to Dayang back in 2013, thus indicating its commendable job execution and ability to retain clients, while also providing added jobs flow and earnings visibility,” said the research arm in a note.
Positive on the job win, Kenanga Research expected another one to two contract wins from Dayang before year end as their estimated total value of contract wins is current circa RM1.2 billion, still slightly off the research arm’s FY18 order-book replenishment assumption of RM1.5 billion.
“Given that the current landscape is geared more towards costs optimisation, we believe EBIT margins for these recent wins would be within the range of 10-20 per cent, as opposed to 20-25 per cent previously,” said the research arm.
All in, Kenanga Research made no changes to its FY18 to 19 assumptions and reiterates their outperform call on the stock with an unchanged sumof-parts derived target price of RM0.98.
Growth catalysts for Dayang moving forward are expected to be further contract wins, earnings delivery and improved outlook in Per dana, while risks to there search arm’s call are weaker-thanexpected HUC/TMM work orders and prolonged down turn in the OS V market.