DAYANG: Strong Margins Propel Earnings Past Forecasts, Outlook Cautious Despite Solid Cash

Dayang Enterprise Bhd (Dayang) reported a robust financial performance for the fourth quarter of fiscal year 2025, with core profit after tax and minority interests (PATAMI) significantly surpassing market expectations. Despite the strong earnings beat, PublicInvest Research has adjusted its recommendation to “Neutral” from “Trading Buy,” citing a more conservative outlook for future activity within the oil and gas sector.

Performance Review

For the fourth quarter ended December 31, 2025, Dayang recorded a core PATAMI of RM56.4 million, marking a substantial 24.5% increase year-on-year. This strong quarterly showing culminated in a full-year FY25 core net profit of RM192.9 million, which considerably exceeded both PublicInvest Research’s and consensus estimates by 120.3% and 110.3%, respectively. The impressive outperformance was primarily driven by stronger-than-expected margins and a significant realised foreign exchange gain of RM20.2 million recognised during the quarter. Furthermore, the company declared a total dividend per share (DPS) of 14 sen for FY25, surpassing initial expectations.

However, operational metrics presented a mixed picture. Gross profit for 4QFY25 declined 33.2% year-on-year, primarily due to fewer work orders in the offshore Topside Maintenance Services (TMS) segment, even with sustained high vessel utilisation. On a quarter-on-quarter basis, earnings saw a 19.7% contraction, a typical reflection of the seasonal monsoon period which often limits offshore activities.

Operational Segment Highlights

The Marine Charter segment’s revenue decreased 22.2% year-on-year in 4QFY25. This was largely attributed to the absence of third-party vessel chartering activities, as most of Dayang’s vessels were strategically redeployed to other regions offering more attractive daily charter rates. Additionally, underutilisation of higher-rate accommodation work barges (AWB) further impacted the segment’s revenue.

Similarly, Offshore TMS revenue experienced a 42.1% year-on-year reduction. This decline reflected lower activity levels and the ongoing transition into a new maintenance contract cycle that commenced in November 2024, aligning with industry trends.

Future Outlook and Recommendation

The latest PETRONAS Activity Outlook (PAO) for 2026-2028 points towards a period of softer activity levels ahead. This is particularly noted for Maintenance, Construction and Modification (MCM), Hook-Up and Commissioning (HUC), and Offshore Support Vessels (OSV) demand. The revised outlook projects reduced man-hour requirements compared to earlier forecasts, signalling a more cautious operating environment as PETRONAS prioritises cash preservation amidst a softer oil price backdrop. Further complicating the outlook are domestic regulatory uncertainties, particularly those concerning PETRONAS’ operations in Sarawak.

Despite these anticipated headwinds, Dayang’s balance sheet remains robust, underscored by a net cash position of 63 sen per share. PublicInvest Research maintains an unchanged target price of RM1.90 but has downgraded its recommendation to Neutral from “Trading Buy.” This adjustment reflects the view that the share price has largely recovered, despite the company’s solid cash position and strong recent performance.