Analysts remain positive on Dayang despite poor 1HFY21 showing
KUCHING: Despite reporting lessthan-optimal results, analysts remain sanguine on Sarawakbased Dayang Enterprise Holdings Bhd (Dayang).
Dayang reported a core net loss of RM28.5 million for its first half of financial year 2021 (1HFY21), arrived after adjusting for unrealised forex and impairments, caming in below expectations against consensus full year estimates of RM82.5 million.
Researchers with Kenanga Investment Bank Bhd (Kenanga Research) said the weak results was mainly due to weaker-thanexpected contribution from offshore topside maintenance services (TMS) amidst poorer activity levels coupled with higher operating expenditure (opex) due to the Covid-19 pandemic.
“Against last quarter of 1QFY21, Dayang managed to turn around quarter on quarter (q-o-q) in 2QFY21 to a core profit of RM5.9 million, from core loss of RM34.5 million,” it said.
“This was largely driven by better vessel utilisation for its marine charter at 51 per cent from 20 per cent, as last quarter was affected by the monsoon season.
“However, this was partially offset by weaker offshore TMS profit, despite the recovery in revenue, due to higher opex arising from Covid-19 during the quarter.”
Cumulatively, Kenanga Research saw that Dayang’s 1HFY21 plunged into losses, from core net profit of RM12 million in 1HFY20, dragged by weaker offshore TMS and weaker marine charter vessel utilisation of 36 per cent versus 53 per cent last year.
“While we are expecting Dayang to continue a sequential recovery in the upcoming quarter, we believe overall, FY21 profit may turn out weaker than FY20,” it added.
“The year was hugely plagued by the group’s hindered ability to fulfil its work orders given the stricter movement restrictions.
“Nonetheless, as borders gradually reopen, we are hopeful for FY22 to be a year of recovery, backed by its remaining orderbook of RM2.3 billion.”
The team over at Hong Leong Investment Bank Bhd (HLIB Research) were still positive on the outlook of Dayang despite its poor showing in 1HFY21 as we believe that its profitability will continue to improve going forward.
“We believe that the higher revenue of RM160 million and core profit of RM5.9 million recorded during the quarter is a good leading indicator towards its future prospects.
“We believe that Petronas would elevate its capex spending in 2HFY21 to make up for the lack of spending on domestic capital expenditure (capex) in 1HFY21 as its 1H capex spending was at one of its lowest levels in more than 5 years despite the significant improvements in its 1H21 results.”