• Maintain HOLD (TP: RM2.30). Dayang Enterprise’s (Dayang) 9MFY24 core PATAMI of RM253mn (+80% YoY) exceeded both our and consensus’ estimates at 89% and 83% respectively. In 3Q24, it declined 34% QoQ to RM85mn due to (i) lower topside maintenance work orders completed, and (ii) lower vessel utilisation rate of 86% (2Q24: 91%). The company proposed 2nd interim DPS of 3sen which brings total DPS to 6sen and higher than total FY23 DPS of 4.5sen. We raised our FY24F earnings forecast by 22% following better than expected 9M24 result. However, we maintained FY25-26F forecasts amidst uncertainties in offshore projects which could result in softer OSV daily charter rate. Maintain Dayang as a HOLD with higher DCFderived TP of RM2.30 (from RM2.25) that implies 8.6x FY25F P/E.

• Key Highlight. 3Q24 headline PATAMI surged 79% YoY to RM134.9mn boosted by one-off gain unrealised forex amounted to RM49.6mn. Excluding this, core earnings grew slightly by 13%. Topside maintenance services (TMS) segment revenue rose 37% YoY to RM261mn due to more work orders/contracts being awarded by oil majors. This trickled down to its PBT that grew by 23% to RM89mn. Meanwhile, marine segment also recorded higher utilisation at 86% (3Q23: 80%) amidst shortage of vessel for offshore production and operation activities. This brings 9M24 utilisation rate to 76% (9M23: 60%) which is largely inline with our estimate at 75%.

• Earnings forecast. We tweaked higher our OSV daily charter rate (DCR) assumption for FY24F, boosting our earnings estimate by 22%. However, we maintained FY25-26F forecasts as the expected slowdown in offshore projects could result in softer DCR.

• Outlook. Following recent MCM contract award, the company has replenished its orderbook from call-out contracts to RM5.3bn (2Q24:RM1.39bn). To recap, it has secured 3 packages namely (i) Package B4 (Sarawak/Sabah Shell), (ii) Package A3 (Petronas Carigali Sarawak Oil Asset), and (iii) Package A5 (Petronas Carigali Sabah Southern) which would valid for 5 years until 4Q29.

Source: BIMB Securities Research - 22 Nov 2024