DAYANG: New Contract Secures Order Book Visibility; ‘BUY’ Rating Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Dayang Enterprise, through its wholly-owned subsidiary DESB Marine Services Sdn Bhd, has successfully secured a new accommodation work boat (AWB) charter contract from Petronas Carigali Sdn Bhd. This significant contract reinforces the company’s strong market position in the oil and gas sector.
Contract Details and Financial Impact
The contract, involving the deployment of the Dayang Mutiara, is set to commence on June 1, 2026, for an initial period of 159 days. It includes an option for an additional 60-day extension. While the exact contract value was not officially disclosed, PhillipCapital analysts estimate the firm contract to be worth approximately RM13 million, based on an estimated daily charter rate (DCR) of RM83,000. This DCR is broadly consistent with last year’s rates, underpinned by the prevailing tight vessel supply in the market due to insufficient new builds and an ageing fleet.
The firm portion of the contract is projected to contribute about RM3 million in net profit after tax (PAT) over its duration, representing approximately 2% of the company’s 2026 estimated earnings. An additional RM1 million PAT could be generated if the extension option is exercised. However, PhillipCapital analysts maintain a neutral stance on this new contract’s immediate impact on earnings forecasts, as its contribution falls within the previously projected full-year fleet utilisation of 60% for 2026. Consequently, no changes have been made to current earnings forecasts.
Strategic Positioning and Future Outlook
Dayang Enterprise continues to demonstrate robust execution capabilities and a strong track record in securing repeat work from PETRONAS. The company currently has four vessels engaged under long-term three-year contracts, each with a three-year extension option. This new award further underpins the company’s sizeable multi-year order book, which provides significant long-term earnings visibility. PhillipCapital analysts remain positive on Dayang’s earnings prospects, highlighting the strength and stability offered by its extended order book as a key driver.
Recommendation and Key Risks
PhillipCapital reiterates its “BUY” recommendation for Dayang Enterprise, maintaining a 12-month target price of RM2.01. This target price is derived from a 12x PE multiple on the company’s 2026 estimated earnings per share. Despite the positive outlook, key risks that could impact this recommendation include unforeseen delays in work orders, a significant decline in charter rates, and higher-than-expected operating costs.
