Dayang records strong 2Q, momentum to continue in 2H
KUCHING: Dayang Enterprise Holdings Bhd (Dayang) recorded a strong second quarter of 2019 (2Q19) and analysts believe that this strong momentum will continue well into the second half of 2019 (2H19).
In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) highlighted that Dayang recorded one of its strongest ever results in 2Q19, broadly within expectations, from improved maintenance work orders coupled with higher vessel utilisation.
“Dayang chalked up one of its best ever 2Q results, recording a core net profit of RM53.5 million – more than doubled year-onyear (y-o-y), thanks to higher profit margins mix for topside maintenance work orders (offshore TMS operating margin improved by 8.6 percentage points y-o-y), coupled with higher vessel utilisation ( 79 per cent compared with 70 per cent).
“Sequentially, 2Q19 bounced back from losses quarter-onquarter (q-o-q) given a seasonally weaker 1Q, driven by higher maintenance work orders (where offshore TMS segmental profit more than doubled) on top of higher vessel utilisation (79 per cent compared with 36 per cent).
“Cumulatively, 1H19 core net profit jumped 65 per cent y-o-y, similarly due to higher margin mix for maintenance work orders (up 3.3ppt) on top of improved vessel utilisation ( 58 per cent compared with 49 per cent),” the research team said.
“After posting one of its best ever quarterly results in years, we believe this may suggest that the
strong job momentum could continue into the 2H, with our numbers and consensus already imputing a slightly stronger 2H19,” Kenanga Research opined.
Meanwhile, it said it is still waiting for the completion of its proposed debt restructuring by end of the year, which entails a one-for-10 rights issue, private placement of up to 10 per cent of total issued shares, and issuance of sukuk of RM682.5 million and subscription of Perdana Petroleum Bhd’s RCPS.
In another note, MIDF Amanah Investment Bank Bhd (MIDF Research) said Perdana Petroleum continues to show improvements with a reported net loss of RM5.4 million in 2QFY19 compared with a loss of RM32.9 million in 1QFY19 attributable to higher vessel utilisation rate of 79 per cent compared with only 36 per cent in 1QFY19 and 70 per cent in 2QFY18.
“Revenue was also higher by 44.7 per cent y-o-y attributable to improved work orders/contract awarded from oil majors in 2QFY19,” it added.
It pointed out that Dayang’s orderbook of RM3 billion is expected to last to 2023.
“The company also disclosed after securing a larger portion of the Pan MCM contracts estimated at
RM1.5-2.0b for the next five years. This brings its total orderbook to RM3 billion lasting the company through to 2023.
“The company is currently participating in bids worth about RM600 million – both locally and overseas. The company remains fairly confident of winning a portion given its track record and successful campaigns in similar projects,” it added.
MIDF Research pointed out that Dayang is no stranger to Petronas’ maintenance, construction and modification (MCM) works as it was the incumbent for the previous HUC contracts from 2013.
“Currently Dayang on its own has six work vessels and two supply boats with an average age of approximately 6.5 years old.