Dayang Enterprise Holdings Bhd's robust order book of RM5.3 billion, bolstered by the award of three maintenance, construction and modification contracts worth an estimated RM4 billion over the next five years, has prompted RHB Investment Bank Bhd (RHB Research) to maintain its BUY call for Dayang.

The call comes with an unchanged target price of RM3.82, a potential 75% upside and an estimated 3% FY25 dividend yield. The stock continues to trade at an attractive valuation of eight times FY25 price-to-earnings ratio, well below its five-year mean.

For the nine months ending September 2024, Dayang reported core earnings of RM253 million, marking a 77% year-on-year growth driven by stronger contributions from topside maintenance services (TMS) and its marine segment, with better charter rates and a higher utilisation rate of 76% compared to 60% in the same period last year.

Despite a quarter-on-quarter decline in third-quarter core profit to RM85 million, attributed to lower offshore TMS work orders and reduced vessel utilisation, the company remains on track to meet full-year expectations.

Dayang's growth outlook is supported by significant call-out contracts from Petronas Carigali, stemming from its three-year asset integrity findings (AIF) contract. This development underscores the continued demand for offshore maintenance services. Meanwhile, its subsidiary, Perdana Petroleum Bhd, is targeting a utilisation rate exceeding 70% for FY25, with expectations of higher daily charter rates due to vessel supply constraints. Efforts are also underway to secure additional long-term contracts, which will enhance earnings stability in the coming years.

Despite the downside risks of potential slowdowns in work orders, weaker oil prices and rising operating costs, Dayang's strong order book and solid execution capabilities position it well for sustained growth in the offshore maintenance sector.