$DAYANG (5141.MY)$ 08/10/24 Dayang Enterprise Holdings Bhd h...

08/10/24

Dayang Enterprise Holdings Bhd has successfully obtained contracts from Petronas Carigali Sdn Bhd to provide six accommodation work boats, featuring varying charter durations ranging from 61 to 153 days per vessel. The contracts encompass four vessels from Dayang's own fleet and two from Perdana Petroleum Bhd, a 64%-owned subsidiary of Dayang, as indicated in the vessel list provided by the company.

We expect Dayang to deliver stronger results in 3Q24, as this is seasonally its strongest quarter, driven by higher work orders and increased vessel utilisation rates. We understand that Dayang plans to bid for new offshore platform decommissioning tenders, which will be split into 3 packages covering Peninsular, Sarawak, and Sabah. Similar to the HUC/MCM work scope, Sarawak offers the largest contract value due to the region's higher number of large offshore platforms. We believe Dayang stands a strong chance of securing the Sarawak package as the region's incumbent player. The contract is expected to be awarded in 3Q25, with work slated to commence in 2026.

We are encouraged by the upcoming MCM packages to be awarded by Petronas, which are expected to feature higher rates and drive Dayang’s earnings and margins moving forward. Dayang is trading at an attractive 9x 2025 PE, supported by strong growth prospects. We reiterate our BUY rating and RM4.50 target price based on an unchanged 16x PE multiple on 2025E EPS.

Be patient.