KUALA LUMPUR (Aug 24): Investors of Dayang Enterprise Holdings Bhd (KL:DAYANG) may see more upside as the group expands its presence overseas, an analyst from CIMB Securities said on Monday.
The bullish outlook came amid news of the oil and gas services provider bidding for a five year maintenance, construction, and modification (MCM) contract worth RM1 billion in Saudi Arabia, with the group additionally bidding for two projects worth a total of US$300 million (approximately RM1.2 billion) in Brunei via its 50:50 partnership with Petrokon Utama.
“Successful bids would mark a meaningful step in building Dayang’s regional presence and reducing its reliance on Malaysia,” the house noted.
Earnings are also expected to be further uplifted as Dayang negotiates to relinquish its A5 Sabah Southern package, which has contributed an unsatisfactory RM24 million in revenue since 2025.
“At the current activity level, retaining the package could become loss-making owing to the overhead required to remain operationally ready. We expect the exit to have a neutral-to-slightly-positive earnings impact.”
CIMB Securities said the asset integrity findings (AIF) contract will also expire at year end, with limited earnings impact as work orders have remained below expectations and contributed little to earnings.
Nevertheless, the house said Dayang remains well placed to secure new MCM contracts, supported by its established workforce, yards, equipment, and access to marine assets.
CIMB Securities maintained its target price at RM2.05 alongside its 'buy' rating on the stock, a mostly common sentiment among the nine research houses tracked by Bloomberg.
At time of writing, all but one house had placed 'buy 'calls, with the latter holding a 'hold' call on the stock.
Dayang shares have slid nearly 10% in the past month, with the stock falling 8.48% to RM1.51 a share, underpinned by a weaker-than-expected second quarter.
Dayang's net profit for the three months ended June 30, 2026 (2QFY2026) had previously fallen 57.2% to RM32.84 million, from RM76.64 million in the same quarter a year earlier.
Despite the weak performance, CIMB Securities is confident that Dayang could see a potential earnings re-rating in FY2027, following a pickup in upstream activity and potential new contract wins.
Moreover, the group currently has an attractive risk-reward profile with the stock trading at 8.9 times its forward earnings, below its five-year forward average of 12 times, the house noted.