KUALA LUMPUR (Nov 5): Shares of Dayang Enterprise Holdings Bhd (KL:DAYANG) rose on Tuesday after bagging a contract, and analysts say the win reinforced their view that the oil-and-gas services firm would be in line for more jobs.
The next round of umbrella contracts could be awarded by the end of 2024, the last of the yearly extension of its previous contracts, and Dayang is likely to secure extensions for its maintenance works due to the expected high demand, Kenanga Investment Bank (Kenanga IB) said in a note.
“We believe that it could still potentially win more packages from Petronas for the pan-Malaysia contract,” Kenanga IB said.
On Monday (Nov 4), Dayang announced that it won a contract with unspecified value for provision of pan-Malaysia maintenance, construction, and modification (MCM) and hook-up commissioning (HUC) services.
Analysts estimate that the award of the contract, which was not a surprise, is worth around RM1 billion for the next five years.
News of the award lifted the stock as much as 14 sen or 6.3% to RM2.35 on Tuesday. The stock was trading at RM2.29 at 3pm, giving the company a market capitalisation of RM2.65 billion. Some three million shares changed hands so far.
The contract marks Dayang’s first out of the 18 available pan-Malaysia packages for MCM and HUC works up for grabs. The Edge Malaysia weekly reported in its October 14-20, 2024 issue that Dayang, among other companies, could together win up to RM10 billion worth of MCM and HUC contracts.
Dayang has previously indicated that it submitted tenders for all packages offered by Petroliam Nasional Bhd (Petronas) and other oil majors, CIMB Securities said in a note. If Dayang secures two more contracts as reported by The Edge, the three packages, together could be worth RM3 billion, the house said.
The works may generate an annual revenue of about RM600 million and contribute RM120 million in profit over 2025-2029, according to the house’s estimates.
Shares of Dayang have climbed 43% year-to-date, tracking gains in the energy sector at a time of buoyant oil prices from worries over escalating geopolitical tensions in the Middle East.
Of the analysts tracking Dayang, eight had rated a “buy” call on Dayang and one rated the firm at a “hold”, with an average 12-month target price of RM3.83, Bloomberg data showed.