Excel – Download the analysis file

Latest Financial – Annual Report 2015 (29 Apr 2016)

FY15 Q4 Results Highlight:

• Dayang’s 4Q15 reported earnings slumped by -49.1%yoy to RM15.9m. Excluding fair value gains on Perdana Petroleum, the company’s 4Q15 results would have been in the red. Dayang’s 4Q15 normalised earnings is RM52.1m, which is 67% YoY.
• Dayang’s cumulative FY15 normalised earnings excluding revaluation gains (+RM108m), impairments (-RM28m), forex losses (-RM15.9m) and asset write-offs (-RM36m) declined by -21.4%yoy to RM141.6m.
• Perdana Petroleum, now a subsidiary of Dayang, contributed an accumulated loss of approximately -RM101m due to low vessel utilisation rates and low profit margins from works executed in FY15.

Valuation:

• In my opinion, fair value of DAYANG range from 2.2 to 2.4. Uncertainty risk of fair value is LOW.

Going Forward:

• Debt restructuring for Perdana’s USD-denominated debt is still ongoing and the group intends to refinance the loans with MYR-denominated loans to reduce currency risk for the group. Group is unlikely to take delivery of its 2 upcoming barges (SK317 &SK318) and it has already written down on the deposit paid for the 1st vessel, which is a prudent move for the group under the current environment to avoid further strain on balance sheet and earnings.Despite the unfavourable short-term outlook for Perdana due to lower average utilisation, the acquisition is a strategic fit for both companies as Perdana’s fleet of vessels will be complementary to Dayang’s HUCC business. This will help Dayang to entrench its position for next round of HUC tender in 2018/2019.
• 1 Mar 2016 – Inclusive of jobs from Perdana Petroleum, Dayang has a total orderbook of RM3.8b with a burn-rate until 2018. Its tenderbook stands at approximately RM350m.
• Dayang is tendering RM350m worth of contracts with tenderbook expected to expand given submission of several tenders in the next few months.
• I am positive on the current developments and progress of Dayang’s HUC projects. In addition, the company is venturing into the EPCC segment of the value chain. Given the company’s history and reputation of being a conservative and risk-averse company, the EPCC venture will bear fruit in the medium to long term.
• I will continue to hold and accumulate DAYANG.

At the time of writing, I owned shares of DAYANG.

https://lcchong.wordpress.com/2016/05/03/dayang-fundamental-analysis-3-may-2016/