• Dayang has received work order awards for 6 of its AWB vessels from Petronas Carigali

• No official contract value is disclosed. However, we estimate the combined contract value to be RM75–85m

• Maintain BUY rating with RM4.50 target price, based on unchanged 16x PE multiple on 2025E EPS

Contract Wins for 6 AWBs

Dayang announced that its wholly-owned subsidiary, DESB Marine Services Sdn Bhd (DMSSB), has received work order awards from Petronas Carigali Sdn Bhd for 6 of its accommodation workboat (AWB) vessels including Dayang Pertama, Berlian, Zamrud, Opal, Perdana Liberty, and Sovereign. The duration of these contracts varies from 2 to 5 months. No contract values were disclosed.

OSV Segment Remains Strong

This batch of contracts is part of the panel contractor arrangement for offshore support vessels (OSV) awarded by Petronas Carigali in Aug24. The AWB fleet includes vessels with capacities of 169, 189, and 197 persons. Based on our channel checks, the current spot daily charter rates (DCR) for AWBs of these capacities ranges between RM120,000–RM130,000. Our back-of-envelope calculations estimates the total contract value to be at RM75–85m. Assuming a 20% net profit margin, we estimate the earnings contribution from these contracts to be RM15–17m, accounting for c.5% of our existing 2025E net profit forecasts. We are positive on the contract win as Dayang continue to benefit from favourable DCR amid tight vessel supply in the market.

Reiterate BUY With RM4.50 Target Price

We make no changes to our earnings forecast as we deem this contract win within our assumptions. We remain positive on Dayang’s outlook, driven by increased offshore activities, higher service and vessels rates, as well as improved vessel utilisation. We reiterate our BUY rating and RM4.50 target price, based on an unchanged 16x PE multiple on 2025E EPS. Key risks to our BUY call include lower-than-expected customer work orders, higher operating costs, and a decline in global oil prices.

Source: Phillip Capital Research - 8 Oct 2024