DAYANG: Operational Uplift and Robust Order Book Drive Earnings Momentum

Investment bank PhillipCapital has reiterated its BUY rating, with a target price of RM2.21, on the back of anticipated strong operational performance and a robust order book. The firm remains positive on the company’s earnings prospects, highlighting significant improvements in vessel utilisation and an extensive order pipeline that provides multi-year earnings visibility.

Performance Review

The company is poised to enter a seasonally strong third quarter, with offshore activities expected to rebound significantly post-monsoon season. Vessel utilisation saw a substantial improvement from 26% in the first quarter of 2025 to 64% in the second quarter, with projections indicating it could exceed 90% in 3Q25, surpassing the 86% recorded in 3Q24. This operational uplift is further supported by an anticipated pickup in topside maintenance works and strong maintenance demand, ensuring high utilisation for its 64%-owned subsidiary, Perdana Petroleum, which is targeting 70% utilisation in 3Q25.

The domestic market continues to benefit from tight vessel availability and a scarcity of new builds, factors expected to sustain charter rates at favourable levels.

Robust Order Book and Future Prospects

The company boasts a healthy order book of RM5 billion, providing earnings visibility for the next four years. In addition to existing contracts, the group is actively bidding for a substantial RM3 billion offshore platform decommissioning package. This tender involves 31 platforms across Sabah, Sarawak, and Peninsular Malaysia over a three-year period. The outcome of this evaluation is expected by 4Q25 or 1H26. Given its strong local presence, the company is well-positioned to secure a significant portion of this package, particularly within Sarawak, further solidifying its long-term growth trajectory.

Investment Recommendation

PhillipCapital maintains its BUY rating and a 12-month target price of RM2.21, derived from a 10x PE multiple applied to its 2026E EPS. The positive outlook is primarily driven by the sizeable multi-year order book, which underpins the sustainability of long-term earnings. The company is currently trading at an attractive 8x 2026E PER and is supported by a solid balance sheet with a healthy net cash position. A dividend per share (DPS) of 7 sen was declared in 2Q25, on track to meet the full-year forecast of 10 sen, offering an appealing 6% dividend yield.

Key Risks

Despite the strong outlook, potential risks include unforeseen delays in work orders, a sharp decline in charter rates, and higher-than-expected operating costs, which could impact future financial performance.