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DAYANG ENTERPRISE HOLDING BHD - UNDERVALUE / OVERVALUE
DAYANG ENTERPRISE HOLDING BHD
Undervalue or Overvalue
Directly taken from the 2018 Annual Report with appropriate amendment:
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This write-up contains some forward-looking statements in respect to the Dayang Group’s financial condition, results of operations and business. These forward-looking statements represent Dayang Group’s expectations or beliefs concerning future events and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.
Readers are hereby cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forward-looking statement. In this respect readers must therefore not rely solely on these statements in making investment decisions regarding the Dayang Group. The writer shall not be responsible for any investment decisions made by the readers in reliance on those forward-looking statements.
Forward-looking statements speak only as of the date they are made, and it should not be assumed that they have been reviewed or updated in the light of new information or future events that would arise in the interim of the publication of this write-up and the time of reading this write-up.
Well the above has to be in small print to save space (thus time) as most will not read it in full.
My family and I hold shares in Dayang Enterprise Holding Bhd (Dayang).
Right all the obligatory disclaimer out of the way, lets dive into the gist of the matter.
DEMAND (Work-load)
There are over 200 offshore platforms in the South China Sea providing the necessary facilities to produce oil that amount to about 650K barrel per day (bpd).
Production is declining since peaking in 2005 around 800k bpd.
Do note that this is OIL production ONLY and does not include gas production!
We all know that since oil price crashed in 2015, there were minimal CAPEX and maintenance to the 200 over platforms up till March 2018.
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Production is DECLINING.
Another issue, ENTROPY. The Law of Entropy can be said like this – things will fall apart; rust never sleep; shit happens; what-ever can go wrong will go wrong; and so on.
Offshore platforms are no different.
FACT – there is demand (work-load) for not ONLY maintenance but to boost production.
Boosting production means modification work to platforms to take new equipment like compressors / injectors / high pressure pumps / new platform – hook up and commissioning, etc.
SUPPLY (Services)
All these activities fall under the various contracts awarded to Dayang in 2017, especially 2018 and recently from Hibiscus too.
Dayang indeed is the King of East Malaysia (after Hibiscus award – Sarawak to Sabah water).
So, coming quarters of 2019, revenue will be good after the drought from 2015 to early-2018, regardless it is lump sum or time rates (splitting hair here).
A bit of history
In 2013 Annual Report, it was reported that Dayang had an estimated RM 4.2B of the HUC / MCM contracts.
Looking at the quarterly reports, the total revenue from mid-2013 to mid-2018 is RM 3.78B. Not bad, 90% of the estimated RM 4.2B despite the low oil price from late 2014 until early 2018. Average revenue in this period (late-2013 to early-2018) is RM 756M per year.
Revenue for 2014 was RM 877M, 16% higher than the yearly average. This is called “front loading”.
A bit of future
Today, Dayang reported (4th quarter report & Annual Report) RM 3B work in hand, plus Hibiscus and Turkmenistan, that would be nearer to RM 3.7B. Yearly it would be RM 740M. With “front loading”, 2019 revenue could potentially be RM 858M.
2018 revenue was RM 938M, is already higher than the “front loading” RM 858M. Could be first half of 2018 revenue is from previous contracts.
Remember ENTROPY? Well looking at the quarterly stats, the lean years of 2015 to 2017, the various E&P cut to the bone, maintenance, as oil price is lower longer! So, before “shit happen” (health, safety and environment, especially environment – oil spill and the like), they better do something when oil price recovered in 2018. That’s why 2018 revenue is so strong (pent-up demand).
Can 2019 be just as strong? Yes, not only because of ENTROPY but because there is added projects to boost production.
Do remember that Dayang, today with Perdana, has the CAPACITY, to do more!
There are 7 AWBoats in Dayang. Perdana has 2 AWBoats plus 7 AWBarges. The barges can accommodate 300 pax versus about 199 for boats. AWB is accommodation work boat or barge, boat has propulsion, barge, none. See Appendix 1 for vessels’ locations.
Two periods, 2009 to 2018 and 2014 to 2018 was analysed. From the above, Dayang before Perdana is a much different animal. The much lower revenue before Perdana pushes the average quarterly revenue too low and hence ignored thereafter. This is basically a Bayesian analysis.
The quarterly average, median, minimum and maximum for the period 2014 to 2018 was then found. And the resulting yearly total derived. Using 2018 info on shares issued, the respective EPS was found with a 20% margin (more later). Actual 2018 (bold) results included for completeness. Note that 2018 quarterly numbers do not add up to audited final number in BOLD.
Using past quarterly results, an estimate of coming 2019 revenue is made.
Surely to consider Dayang can only achieve minimum revenue for 2019 is highly not possible (too pessimistic).
Revenue nearer to average and median would be feasible.
2019 revenue between median to maximum is highly likely given the pent-up demand and the indication given by Management.
In 2018 4th Quarter report, Dayang said that work going forward is “sustainable”. This, “sustainable”, was mentioned in each of the previous quarterly reports that preceded with excellent quarterly results. The respective sentences are extracted to Appendix 2 for easy reference.
Weather
Last year, the monsoon was mild resulting in the best 4th Quarter revenue ever.
Normally, monsoon carries over into January / February the following year, that is, 2019. But as far as one can remember, there was not a prolong adverse weather at the beginning of this year.
So, quarter 1 2019 could be another good quarter compared with previous years’ 1st quarters.
Quarter 2 and 3 are always busy and this year is no different. Quarter 4, well unless one can travel to the future, odd is the weather could be bad. Your guess will be as good as my guess.
So, estimated quarterly revenue is 200M, 260M, 310M and 200M giving a total for the year of RM 970M. Using a profit margin of 20%, the net is RM 198M – EPS of 20.1 sen.
Profit margin
Below, average profit margin for the period 2009 to 2018 is determined that included negative quarterly profit margins. Ignoring these negative profit margins give an average margin of 25%.
Looking at the period 2014 to 2018 and ignoring negative margins, the average margin is 23%.
So, a 20% profit margin, about 13% discount from 23%, would be fair considering the risks involved.
Petronas outlook
The 2019-2021 outlook indicated high activity level for maintenance of 17+ million manhours for each of next three years. For more details please refer to Appendix 3.
Investment Banks EPS
Here are the EPS from various investment banks (IB). A simple estimate could be to just distributed the RM 3B over 5 years, RM 600M per year. A 20% profit margin will give RM 120M – EPS 12.4 sen.
In addition, comparing with the average, minimum, median and maximum values from year 2014 to 2018, it appears that EPS given by the various IBs are too conservative, especially MIDF.
KIB uses Book Value of one time. However, checking with various books on security analysis as well as the World Wide Web, the book value should have intangibles back-off.
In 2018 annual report, Goodwill is RM 654M, thus adjusted book value would be just 49 sen. With target price of RM 1.2, the price to book is 2.5 times.
There seem a mis-understand of using price to book value valuation method. This method is used to value capital intensive businesses like automobile, E&P, transportation like airlines and banks.
Yes, Dayang is in the Oil and Gas business, but it is not an E&P – exploration and production.
Maybe PERDANA valuation is appropriate to be based on book value.
Cash Flow
The past few years of low oil price for longer, created a lot of impairment (non-cash movement). So, an analysis of cash flow would review a lot.
As can be seen, in 2013 and 2014, there were high CAPEX as vessels, Dayang Opal and Ruby were being fabricated.
What is most showing, during the low oil price period, FCF exceeded 30% of revenue! So, if 2019 revenue is RM 1B, using just 30%, the FCF would approximate RM 300M. As CAPEX is now relatively low going forward, there will be ample fund to pay down borrowing or take up any capital requirement arising from Perdana’s debt restructuring without recourse to shareholders of Dayang.
At 31/12 18, there is RM 194.6M cash (or cash equivalent), 20 sen per share.
This write-up is not complete without touching on debt.
From annual reports of both Perdana and Dayang, outstanding loans are summarized as shown.
Dayang’s debt included Perdana’s, thus debt level of Dayang (only) is adjusted as shown. Dayang can comfortably pay down its’ own loan obligation as seen above, as well as Perdana’s.
Dayang had advance about RM 200M to Perdana to pay their debt obligation as cash flow at Perdana is insufficient.
SUMMARY
1) There is demand for Dayang service due to ENTROPY and declining oil production
2) Petronas Outlook indicated next three years, maintenance will need 17 million manhours per year
3) Dayang, with Perdana is capable to fulfil the demand for coming 5 years
4) Estimated 2019 revenue is RM 970M, with 20% margin, EPS is about 20 sen.
5) Cash flow of Dayang is good and able to meet its debt obligation as well as Perdana
6) Dayang 2019 EPS is underestimated by IB
Do note that there are risks a plenty: -
- Oil price dropping below USD 50 per barrel (Brent); this is the current oil price used for most development projects hurdle; if so, may cause oil majors to cut back again
- Weather risk
- Implementation / execution risk
These are near term risks.
Longer term risk like losing Petronas’ licenses, recall of outstanding loans and such like are beyond this write-up.
CONCLUSION
Dayang has the capability and capacity to carry out more than the RM 3.7B work awarded since 2017.
Because of ENTROPY and declining oil production, higher maintenance and modification work arising from projects to arrest declining production would result in high level of activities leading to 2019 EPS of 20 sens. This is higher than those given by investment banks (10.8 to 15.6 sens).
Petronas Outlook confirmed this level of high activities.
Free cash flow is excellent and more than enough to repay borrowing (instalment) of both Dayang and Perdana as going forward, there is low CAPEX requirement.
Any debt restructuring of Perdana leading to additional capital need from Dayang is easily covered by the very good free cash flow as well as the cash now in hand of 20 sens per share (RM 195M).
Undervalue or overvalue
In a rational world, PER of 10 would be fair given the risker marine work and oil / gas environment.
Appendix 1
Dayang is very busy. There are insufficient vessels that additional vessels need to be chartered from Perdana as per reports (source: Bursa) below.
Following are the locations of the 7 AWB. Out of 7, only 1 is be back at Kuala Baram port.
- Pertama – D35R-A since 3/3/19
- Ruby – D35DP-A since 28/2/19
- Berlian – Betty since 16/3/19; Baram since 6/5/19
- Topaz – BKJT-A since 4/3/19
- Opal – Baram A since 18/3/19
- Zamrud – D18 since 18/4/19
- Nilam – anchor at Kuala Baram since 28/3/19
Perdana AWB locations are as follow: -
- Excelsior – to E11 soon
- Enterprise – unknown
- Endurance – Baronia since 2/3/19
- Odyssey – Bakau
- Resolute – Kemaman Supply Base
- Protector – Miri anchorage since 14/4/19
- Emerald – going to Baronia
- Liberty – at Labuan
- Sovereign – at Luconia
PERDANA PETROLEUM BERHAD ("PPB" OR THE "COMPANY")
LETTERS OF AWARD FROM DAYANG ENTERPRISE SDN BHD TO CHARTER 2 UNITS OF ACCOMMODATION WORKBARGE (This announcement is dated 21 March 2019)
The Board of Directors of PPB wishes to announce that the wholly-owned subsidiary of the Company, Perdana Nautika Sdn Bhd (“PNSB”) has on 20 and 21 March 2019 accepted the letters of award to charter two units of accommodation workbarges (“AWB”) to Dayang Enterprise Sdn Bhd (“DESB”), a wholly-owned subsidiary of Dayang Enterprise Holdings Berhad (“Dayang”) which is a major shareholder of PPB. The first AWB will be chartered for a period of 120 days with an extension option and the contract will begin on 29 March 2019. The second AWB will be chartered for 200 days with an option period of 15 + 15 days and the contract is effective from 1 April 2019 (collectively, the “Vessels Charter”).
PERDANA PETROLEUM BERHAD ("PPB" OR THE "COMPANY")
LETTER OF AWARD FROM DESB MARINE SERVICES SDN BHD TO CHARTER A WORKBOAT (This announcement is dated 23 April 2019)
The Board of Directors of PPB wishes to announce that the wholly-owned subsidiary of the Company, Intra Oil Services Berhad (“IOSB”) has on 15 April 2019 accepted the letter of award to charter one unit of workboat (“WB”) to DESB Marine Services Sdn Bhd (“DMSSB”), a wholly-owned subsidiary of Dayang Enterprise Holdings Berhad (“Dayang”) which is a major shareholder of PPB. The WB will be chartered for 180 days with an option period of 150 days and the contract is effective from 15 April 2019 (the “Vessel Charter”).
Appendix 2
Below are the Prospect statements extracted from the quarterly reports of 2018. Note the dates that these reports were released. This meant that knowledge of quantities of work (revenue) of next quarter were already known.
Q1 2018 – prospect, page 20 (released on 24 May 2018)
Currently, more vessels are employed, and the Group is confident of a better 2Q and 3Q, barring unforeseen circumstances. ……. Presently, activities for all the Dayang contracts are ramping high and this should continue through to the end of 2018.
Q2 2018 – prospect, page 23 (released on 24 August 2018)
Taking cue from the work orders in hand, we are hopeful that business operations will remain busy over the coming months which bode well for our financial results. Barring any unforeseen circumstances, we are optimistic that the turnaround in our earnings will be sustainable, …….
Q3 2018 – prospect, page 23 (released on 23 November 2018)
Barring any unforeseen circumstance, we are optimistic that the turnaround in our earnings will be sustainable, premised on our fairly sizeable order book of RM3 billion to last us until 2023.
Q4 2018 – prospect, page 24 (released on 22 February 2019)
Barring any unforeseen circumstances, we are optimistic that the strong earnings trend will be sustainable, premised on our fairly sizable order book of RM3 billion to last us at least until 2023.
Also take note, the use of “sustainable” repeatedly, especially Q4, this would mean that Q1 2019 should be decent.
Appendix 3
Petronas Outlook – extract of page 42, 52 and 53 indicating the work-load for year 2019, 2020 and 2021.
So, it will be busy years for Dayang (and Perdana).
Page 42
Page 52
Page 53
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Created by teoct | Jul 23, 2020
Discussions
5 people like this. Showing 32 of 32 comments
teoct ,very good analysis .You have done a lot of homework on dayang business. The 2019 estimate of 970 million revenue is on the conservative side. FY 2018 Dayang already hit 935 million. My estimate is 1.1 billion with eps of.about 25 sen.
2019-05-17 08:58
Prospects
We are proud to deliver our highest-ever quarterly revenue in the fourth quarter of 2018 which is typically a
seasonally weak quarter due to the monsoon weather. However, for this current quarter, offshore activities
were ramped up and works continued to be issued to us under time write (unit rates) and lump sum work
orders. This remarkable achievement came on the back of the robust work orders issued for the PCSB
Maintenance, Construction and Modifications Contract (MCM) and Topside Maintenance Services works
under the Pan Hook-up and Commissioning Contract (Pan HUC) as well as the newly minted Pan MCM
Contracts which were rolled out in the fourth quarter.
As a result of the strong operational performance in the fourth quarter of 2018, Dayang has also recorded one
of the highest quarterly profit after tax in our history. This is largely attributable to better cost control,
improved efficiency and streamlined project management. It is also evidently positive that vessel utilisation
came in stronger at 73%in the fourth quarter, compared to a utilisation rate of 51% for the fourth quarter a
year ago. Our fleet utilisation has been gradually improving since the first quarter of 2018 when it was as low
as 27%. We are particularly delighted to note that the synergistic collaboration between Dayang and its
subsidiary, Perdana Petroleum has indeed worked out satisfactorily and this should reinforce our position to
be the leading integrated MCM player.
Barring any unforeseen circumstances, we are optimistic that the strong earnings trend will be sustainable,
premised on our fairly sizable order book of RM3 billion to last us at least until 2023. Notwithstanding the
volatility in oil price, we remain upbeat on the company’s future prospects as Dayang has emerged stronger
after going through one of the most challenging period over the past few years. We are confident that our
balance sheet will continue to be strengthened as the impressive financial performance in 2018 has clearly
demonstrated.
After securing a larger portion of the Pan MCM contracts estimated at RM1.5-2.0 billion from multiple
production sharing contractors in Malaysia this year, Dayang has also started to look at international
expansion to further grow the company.
In November 2018, Dayang together with Gujurly Inzener, its local partner in Turkmenistan, via a joint
venture company, were awarded a contract for the provision of facilities maintenance support for Petronas
Carigali (Turkmenistan) Sdn Bhd. The value of this contract which is estimated to be around USD100 million
covers a three-year period effective from 01 January 2019 to 2021 (with an option to extend for a further
period of one year). This contract is expected to contribute positively to Dayang’s profitability.
As for our subsidiary Perdana Petroleum Berhad (PPB), the proposed debt restructuring scheme with the
financial institutions under the Corporate Debt Restructuring Committee (CDRC) of Bank Negara Malaysia is
still in progress. Once this restructuring is finalised, PPB and Dayang Group should emerge stronger than
before. We are hopeful that Dayang will return to its glorious days in the not-too-distant future as we
carefully execute our long-term business plans. The Board will remain vigilant and continue to exercise due
care and prudence in the running and administration of the company’s business.
2019-05-17 09:19
Thank you all for reading. Comments - thank you for taking time to pen your thoughts. And the likes - many thanks.
@rajachulan - I am not sure they read in detail and appreciate the nuance (subtle hint). Of course I may be totally wrong in my assumption that coming Q1, compared to previous years Q1 will be about the best ever in Dayang history.
@pjseow - indeed Dayang can do more and RM1.1B is highly probable. In my alternative analysis, I have RM1.17B (err i'm spiting hair here) but I stayed on the conservative side in the write up.
@titus - yes, this hedge fund is a pain in the ass. This selling would go on for about a couple of weeks. Need to be patient here. Eventually, there is no denying Dayang coming superior performance. Hedge fund by nature are short term in thinking and respond to small changes in big way, thus causing increase volatility. Patient.
I just wonder what that person going to say to his/her boss for losing a couple of millions.
Have a good weekend.
2019-05-17 09:51
I guess another example of knowledge does not mean profits......hardwork does not mean rewards
2019-05-17 10:11
at one time, people also know the most minute details of.......Hengyuan and LionInd..........now this.
2019-05-17 10:17
@teoct I am 100% with you on dayang prospect..it just...instead of going through the numbers... i rely on the credibility of mgmt shown in prospect...
I dealt with these numbers in my real life profession... I know how these numbers were presented...so not going to mention them anymore...
to me... it is the vision of the mgmt that matters... and their credibility on how they communicate their vision in the prospect section...
like layhong.... yap can promise you moon and star... but ended up delivering only empty air... if you choose to give this kind of mgmt 2nd chance... dont blame people later...dont even blame yap...
now... let see how the newly RE listed chicken farm can deliver...
gdluck and enjoy
p.s i was forced to sell dayang earlier when i found myself in the middle of the sheep herd...herd coming out from nowhere...out of sudden...in large number... lol
2019-05-17 10:29
dayang is in a very interesting price zone.....I mean, it is not $ 1.70 now..........but?
2019-05-17 10:32
I am not entering now qqq3...
10 days line already died...
10 weeks line start pointing down...
respect MR MARKET...
because good prospect dayang has.. i will keep her in watchlist to keep watching and waiting for MR MARKET's return...
2019-05-17 10:47
I am not a share holder but I am impressed by your detailed analysis. Many assumptions. You actually wrote a book and I would welcome an executive summary of your final recommendation. Keep on trucking!
2019-05-17 11:00
Teoct,
I don't think you actually understand the business. Because the numbers are all projections of current to the future etc. This is the first time i see someone use bayesian to calculate earnings.
You may feel differently, but for a "know nothing" business, ie business you know nothing about. A good test is this, can you answer the below questions well.
(who are the competitors? What are their edge? Barriers of entry? Cost base and competence comparison? Value of services provided compared against competitors? etc).
If you can't answer these questions, the only price worth paying is far below replacement cost/book.
Dayang is clearly above that. In any event, good luck. I wish you all the best.
2019-05-17 11:09
@qqq3, thanks for reading. Yes, knowledge can kill if not use properly. But I think this is better than NATO - no action talk only.
You are interested in Dayang? Why, because of the famous person or all these write-up that gives you comfort to look? Yes, price now is better than 1.70 Care to share the many buts ...... it will certainly help sharpen my forecasting and be a better investor, many thanks.
@rajachulan - yes character of management or good management in general is very important in investing. I have friends who know the top management very well and it is a comfort what they (my friends) said.
Happy investing.
2019-05-17 11:10
If its a punt/speculation, what you need to know is not the intrinsic value of the business.
But what other people think the intrinsic value of the business, and how is their psychology regarding it.
2019-05-17 11:12
@dusti - thanks for your comment. Yes, I was trying to be short and concise, but heck. Point taken and I will attempt an executive summary in future.
@Choivo Capital - Jon, I did not compare with competitors as I was lazy to be honest, yes if I analysed all the questions you asked, I will be working full time with some IB. I am not and I am in my sunset years, no excuse but sometime my gut tells me this is enough. It is actually hard-work and stressful too (skin in the game) despite now the much much easier access to information.
Nonetheless, for info, I used to ride on this type of AWB - enough said. But thanks for the comments. I will ponder on it.
Have a productive coming weekend.
2019-05-17 11:25
teoct > May 17, 2019 11:10 AM | Report Abuse
Care to share the many buts
=========
I am a trader...the buts have more to do with trading.
but seriously, Dayang is not a very high quality company also.
2019-05-17 16:09
qqq3 - many thanks for your sharing. But is the query an abuse as "Report Abuse" - I do not understand this.
Choivo Capital - thank you so much for the well wishes. I am not good at psychology and I am going to need tons of well wishes given the RI just announced.
And qqq3, your take on the RI is most succinct. Yes, bankers prefer to lend to a stronger entity than a weaker one. I need to internalized this.
From the many comments, there is no mention that with this regularization, local institutions will now be allowed to invest in Dayang / Perdana. Whether they will return is another issue.
Again to all of you, readers and commentators, thank you again for sharing and I hope these exchanges make all of us better investors.
2019-05-18 10:07
Hi ! Teoct,
Thankx for your valuable sharing in Dayang.
I remember your in depth sharing for Hibiscus.
How would you see Hibiscus's plan to explore the rig in Australia ?
Any simple guidance on that ?
2019-05-18 11:36
teoct qqq3 - many thanks for your sharing. But is the query an abuse as "Report Abuse" - I do not understand this.
=========
neither do I
2019-05-18 11:43
teo
u are hardworking chap.
I think if u follow example of Philips and focus exclusively on high quality companies, u will retire very rich.
lower quality companies is tough to predict.....suitable for trading only and that do not need indepth analysis.
2019-05-18 11:52
With geopolitic issue n rising Crude oil expected to be above usd80 n bankers around I don't bother right or underwear issues,it is about opportunity cost comes with risk or reward.
risk?even makan also can get stuck or constipation.
2019-05-18 11:55
great detail! what is entropy?
my opinion, if Dayang posts two more good quarter profits and this private placement + rights issue exercise to complete, then only this stock price will find its strength to move up.
IB wants lower entry price to the private placement, especially when one of them has been given the job to do this. now it makes sense, the lower target price and sell calls. too high price, private placement of 10% may not be successful. ROI.
famous uncle selling? meeting margin call probably as he claimed. but if the rights issue of 1 out of 10 shares, he needs some cash. sell earlier for later purchase?
my guess is next quarter profit will not be good, else how to maintain at current price or force it lower. how many IB sell calls also no use. in any case, Dayang owners will not want too cheap entry into their company. win win is the key.
2019-05-18 12:16
VenFx - thank you for reading. I will need to go back to check on Hibiscus.
qqq3 - thank you for the kind words and indeed that is my aim to be a multi-millionaire like Mr. Philip. But I need ammunition, and I am of the opinion that Dayang, while you think is not a great company, is a company with RM3.7B in hand. Anywhere it is another big debate what are the attributes of a great company.
7300 - thank you for commenting.
jefferykong - Please google it. Thank you for reading and taking time to comment.
Tomorrow, interesting time.
2019-05-20 18:53
sted by teoct > May 20, 2019 6:53 PM | Report Abuse
what are the attributes of a great company.
==========
u will know when u see one.....if u have a head for investments.
2019-05-20 18:59
VenFx - I had a look at Hibiscus and there is no mention of "rig" in Australia. Care to elaborate?
Meanwhile, the latest (Apr19) presentation material from Hibiscus indicated that there maybe "farm out" for VIC-P57 and joint development with other nearby operators for VIC-L31.
Do note that another side-track (Gua-P1) at Anasuria is being carried out that potentially will add another 1,000 bpd (net) to about 4,400 bpd production now. And the Cook water-injection well already drilled. Water line will be laid next few months for water to be pumped into the cook reservoir to increase production. While Hibiscus share is only 19+%, some additional barrels is always good. There is potentially more good news as the well drilled (for water injection) showed that the water oil line is deeper than anticipated. This may mean that there are more oil in the reservoir. Management indicated that this is under review / assessment.
Finally, with infill wells drilling at St Joseph to start anytime, next financial year, the total production would be higher at 11,000 bpd vs about 9,000 bpd now, a 22% boost.
Of course all this will depend on the oil price and sentiment of the market then. Nonetheless, more production is always better as operation cost will be further reduced. So, it is positive in my view and Hibiscus should be worth more.
Have a good week.
2019-05-21 10:34
Wow, what a week. Need to go back and study where the mistakes were. Looking at Kenanga estimates for 2019, Dayang going to make less money (net profit) compared with 2018. Profit margin is hammered down to just above 10%.
Anyone can help explain, thanks.
2019-05-23 11:32
Mr Teo,
"(who are the competitors? What are their edge? Barriers of entry? Cost base and competence comparison? Value of services provided compared against competitors? etc).
If you can't answer these questions, you know nothing about the business and the only price worth paying is far below replacement cost/book."
This lesson when i learnt it was not that cheap as well.
I hope you did not have too much in there.
=====
Posted by teoct > May 23, 2019 11:32 AM | Report Abuse
Wow, what a week. Need to go back and study where the mistakes were. Looking at Kenanga estimates for 2019, Dayang going to make less money (net profit) compared with 2018. Profit margin is hammered down to just above 10%.
Anyone can help explain, thanks.
2019-05-23 11:35
pjseow - trust you read both Kenanga review (one in The Edge Daily & the other today at i3: https://klse.i3investor.com/blogs/kenangaresearch/207662.jsp), it is so negative that it borders on the unbelievable.
Appreciate your views, thanks.
2019-05-24 10:20
teoct > May 24, 2019 10:20 AM | Report Abuse
pjseow - trust you read both Kenanga review (one in The Edge Daily & the other today at i3: https://klse.i3investor.com/blogs/kenangaresearch/207662.jsp), it is so negative that it borders on the unbelievable.
=============
Kenanga tp of 80 is following the patterns of other rights issues and a bearish environment ....no one knows it will come true or not.
2019-05-24 10:46
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
titus
Wow...such a detail analysis. Appreciate it but can it withstand tge pressure of FF sell off....something to ponder about.
2019-05-17 07:12