Dayang a strong contender for RM10 bln HUC contract

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KUCHING: With news afloat of the possible awarding of the RM10 billion Pan Malaysia hook up and commissioning (HUC) project as early as this month, analysts are pegging Sarawakian player Dayang Enterprise Holdings Bhd (Dayang) to be the beneficiary of this contract.

Analyst Quah He Wei from HwangDBS Vickers Research Sdn Bhd (HwangDBS Research) in his research note yesterday believed that Dayang was the strongest contender for the contract based on several factors.

“News of the RM10 billion HUC project has been in the market since the last quarter of 2012 (4Q12),” Quah explained.

“The market had been expecting new contract awards since the previous contracts expired at end-2012.

“These have been delayed, but we understand they may be awarded as soon as this month. Several names, including Dayang, SapuraKencana Petroleum Bhd, Petra Energy Bhd and Shapadu Energy & Engineering Sdn Bhd, have been touted to be among the winners because of the large size of the contracts.

“We believe Dayang is the strongest contender for the contracts in view of its impressive track record and timely execution which has gained recognition from its clients.”

The analyst added Dayang had its own fleet of accommodation vessels which made the group more efficient operationally, compared with those that had to charter third-party vessels.

Looking back on the group’s activities last year, Quah noted that Dayang had been expanding capacity since 4Q12, acquiring a new fabrication yard in Labuan and expanding its yard in Telok Kalung, Terengganu.

“In addition, it has ordered a new RM72 million workboat from Shin Yang Shipyard to be named Dayang Opal, which is scheduled for delivery by end-2013.

“These expansion activities undertaken over the past six months suggest Dayang expects to win a huge contract,” he premised.

“We understand certain quarters are skeptical of Dayang’s ability to take on huge contracts.

“We note that in addition to its recent capacity expansion, Dayang also has the option to charter vessels from 26.1 per cent-owned associate, Perdana Petroleum Bhd (Perdana Petroleum).

“Dayang is the single largest shareholder in Perdana Petroleum, which would help it to gain access to its fleet of 14 vessels comprising work barges, work boats and anchor handling tug boats, which could be used for HUC and topside maintenance works.”

The HwangDBS Research analyst also highlighted that the marine assets would also come in handy if Dayang secured some of the packages under the RM10 billion Pan Malaysia HUC project.

“We would not discount rumours that Dayang might increase its stake in Perdana Petroleum given that it would need more accommodation vessels if it wins the mega contracts.

“Nevertheless, Dayang will always have the option to charter vessels from Perdana Petroleum and equity-account earnings contribution.”