DAYANG ENTERPRISE HOLDINGS BHD

MIDF Research has downgraded Dayang Enterprise to a “sell” call from “neutral” rating previously with an unchanged target price of RM0.83 per share.

The house, however, still felt that Dayang’s fundamentals remained intact with strong orderbook and expectation of higher callouts.

MIDF explained that as speculated since the introduction of Petronas’ maintenance, construction and modification (MCM) work packages, Dayang emerged as one of the project winners.

Although no definite value was given to the five-year Package A or Sarawak offshore oil portion of the MCM works, the house believed that the total contract value was worth more than RM1bil, effective from Sept 20, 2017 to Sept 19, 2022.

Dayang’s current order book stood at more than RM3bil, with a life span until 2022.

At present, Dayang has seven work barges with an average age of 4.7 years and nine work boats with an average age of six years old, all of which are fit for purpose within the stringent specifications required by Petronas and its production sharing contractors.

“We are maintaining our earnings forecasts at this juncture as this win is within our expectations.

“In addition, we believe that planning and mobilisation of offshore assets will take place in the first half of financial year 2018 (FY18), which implied that actual pickup in activities will only start in second half FY18, where earnings will be recognised,” the house noted.