Dayang Enterprise Holdings Bhd
(June 5, RM2.51)
Maintain buy with an unchanged target price of RM3.42: Dayang Enterprise has secured a two-year RM250 million facilities improvement project (FIP) from Petronas Carigali Sdn Bhd.

This Package-A project encompasses the Sarawak offshore operations and Sabah offshore operations.

This contract is on a “call-out” basis inclusive of modification works, upgrading works, hook-up and commissioning (HUC), and major upgrading works.

Dayang currently has an order book of approximately RM3.8 billion, largely consisting of HUC, and topside maintenance job orders.

Realising this, the company has since expanded its focus into the other segments of the oil and gas value chain such as major modification works and facilities improvement works.

The company currently has a tender book of approximately RM600 million.

Activities level in the first quarter of financial year 2015 remained robust with projects from Royal Dutch Shell plc, JX Nippon Oil & Energy Corp and Petronas Carigali recording commendable project progress.

However, the HUC and topside maintenance works from Murphy Oil Ltd experienced a slight decline in activities level due to rescheduling and reorganisation of work activities.

We are maintaining our earnings forecasts at this juncture as we have imputed and foreseen this project win.

Assuming a conservative net margin of just between 10% and 15%, this project will contribute approximately RM25 million to RM38 million to Dayang for the duration of two years. — MIDF Amanah Research, June 5.

This article first appeared in The Edge Financial Daily, on June 8, 2015.