KUALA LUMPUR (Oct 8): Shares of Dayang Enterprise Holdings Bhd (KL:DAYANG) rose on Tuesday as investors cheered the latest contracts win, while analysts stayed optimistic on the oil-and-gas services firm’s outlook.
Dayang Enterprise rose as much as 6.3% or 15 sen to RM2.55. The stock was trading at RM2.53 at 10am, giving the company a market capitalisation of a little over RM2.9 billion. Trading volume totalled 3.38 million shares so far.
“We are positive on the contract win” as the company benefits from “favourable” daily charter rates, amid tight vessel supply in the market, said Phillip Capital.
The contract values for the six accommodation workboats ordered by national oil-and-gas firm Petroliam Nasional Bhd (Petronas) were not disclosed in the announcement on Monday, though Phillip Capital estimates revenue of up to RM85 million.
A shortage of offshore supply vessels, particularly accommodation workboats, have been keeping charter rates high for the industry, amid strong global demand for such ships from oil majors ramping up offshore activities.
Shares of Dayang Enterprise have climbed 58% so far this year, tracking gains in the energy sector, at a time of buoyant oil prices from worries over escalating geopolitical tensions in the Middle East.
Analysts are broadly bullish on the stock, with eight out of nine recommending a “buy” call on Dayang Enterprise. The consensus’ 12-month target price is RM3.83, according to Bloomberg, implying a return of as much as 52% from its last price.
News of the contracts also “helps alleviate near-term concerns over a potential slowdown in upstream maintenance activities in Sarawak,” Kenanga Investment Bank said in a note.
In July, state-owned Petroleum Sarawak Bhd signed a deal to take over the gas aggregation business from Petronas, raising concerns that the national oil corporation could trim its capital expenditure due to the loss of revenue from the transfer.
Both Phillip Capital and Kenanga have Dayang Enterprise on “buy” calls and maintained their earnings forecast, as well as target prices for the stock.