Nice to see is cumming down to RM1 or below. Recession in the pipeline. No point OPEC cutting oil production. Let the market force to determine the actual oil price !
Dayang is an oilfield services company operating mainly in Malaysia. It initially focussed on topside maintenance services where it is one of the big boys in the offshore hook-up and commissioning business.
The company did very well in the topside maintenance services segment and got into trouble when it expanded its marine charter business in the early part of the last decade with the acquisition of Perdana Petroleum.
Business was good for the Malaysian marine charter scene until crude oil prices dropped to about USD 60 per barrel in 2016/17. The demand for marine charter services declined tremendously and many of the Bursa marine charter companies got into trouble. Dayang faced similar problem with its marine charter segment.
While crude oil prices today are 1/3 higher than the lows in 2016/17, the marine charter business has yet to fully recover. While Dayang topside services business is doing very well, its performance has been pulled down by the marine charter segment. The table below shows the relative performance of the 2 segments for Dayang.
Dayang spent tons of money on the marine charter business. With hindsight shareholders would have been better off if this was paid out as dividends rather than spent it on Perdana Petroleum. Did management do a good job in allocating capital?
Dayang is an oilfield services company operating mainly in Malaysia. It initially focussed on topside maintenance services where it is one of the big boys in the offshore hook-up and commissioning business.
The company did very well in the topside maintenance services segment and got into trouble when it expanded its marine charter business in the early part of the last decade with the acquisition of Perdana Petroleum.
Business was good for the Malaysian marine charter scene until crude oil prices dropped to about USD 60 per barrel in 2016/17. The demand for marine charter services declined tremendously and many of the Bursa marine charter companies got into trouble. Dayang faced similar problem with its marine charter segment.
While crude oil prices today are 1/3 higher than the lows in 2016/17, the marine charter business has yet to fully recover. While Dayang topside services business is doing very well, its performance has been pulled down by the marine charter segment. The table below shows the relative performance of the 2 segments for Dayang.
Dayang spent tons of money on the marine charter business. With hindsight shareholders would have been better off if this was paid out as dividends rather than spent it on Perdana Petroleum. Did management do a good job in allocating capital?
Dayang has a history of poor management when times are bad. This counter is fund managers puppet. Since global economy is bad there is no way oil will recover. China economy is also slowing down and flagging red alert. The rise of EV vehicles another sector that will hit oil prices hard next year. Time to say sayorana or will be hit by the massive sell down by the analysts and bankers. Estimated the coming weeks will be below USD60. The X'mas rally is halted all signalling bad times ahead and will hit every sectors badly unless only certain counters ! Advice to cut loss asap !
As traditionally next quarter is Dayang's weak quarter, Dayang target may be around 1.43 again if want to form double bottom rebounding model. if want to form a reversal shoulders and head rebouding model, may be head bottom is around 1.26. Hope I am wrong
Bursa listed Perdana Petroluem is 64% own Bursa listed Dayang. Dayang is basically an oilfield services company with a small marine charter segment. However in 2015 it acquired Perdana which is mainly in the marine charger business. When you look at the ROE for these 2 companies over the past decade, you can see Dayang outperforming Perdana. From a fundamental perspective, why would you want to own Perdana? From a risk mitigation perspective, Dayang is more diversified. Of course the elephant in the room is whether Dayang made a mistake in acquiring Perdana. With hindsight it was better not to do so. Moral of the story? Many companies have both organic and acquisition growth. But not all acquisitions added value to the shareholders. https://www.youtube.com/watch?v=quk378SFfCg
Will Dayang close the 2020 gap down RM2.05 (year 2020) and move higher? Seem the chance of closing the gap is very high and can start looking at this counter for some profit
Dayang got another contract extension .. up to now already 4 contracts in a month , a good sign for the company .. wonder if IB will adjust the TP due to this ??
We have been told that to minize risk, we should have a portfolio of stocks. Does it mean that we can have any stocks (assuming that they are fundametally sound and cheap)
Take the example of Bursa contruction/property company Naim and Busa oil and gas company Dayang. You can see from the revenue trend chart that there is not much correlation between them. Actually there was a negative 10% correlation.
But then Naim owns about 25% of Dayang and probably influened its decision making. So are they uncorrelated stocks? https://i.postimg.cc/L5GkR9p9/Dayang-vs-Naim.png From a statistics perspective, as long as 2 stocks are not 100% correlated, having them in a portfolio will result in a lower volatility compared to their individual volatility. If you looking for less volatility, then having them both is better than just investing in one.
Of course, the big picture question is if part of the performance of Naim is tied to the performance of Dayang, would it be better to look for another oil and gas stock?
rr88 got it, by the way thanks, I actually followed your comments in SCIB and it helped me a lot, sold at RM1.18 before the triple LD, and the dead cat bounced sold at RM0.46. Enough to send my kid to A-Levels boarding school. Thank you.
Let see what happens here in Dayang. Again thank you!
PS. I am newbie haha learning technical analysis, financial analysis and tapping on the experiences of people like you who shares. God bless you and your family.
I read, if not mistaken the Edge, the analyst estimated the contract with Petronas is worth RM400 million to RM 1.2 billion, if you take the lower end of the estimate and compare with their annual report you probably get the drift.
Not too sure about TP though, just make whatever you happy with, and run fast
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....
kmohan62
484 posts
Posted by kmohan62 > 2023-11-28 10:24 | Report Abuse
Something is brewing...price being depressed deliberately.