KUCHING: Dayang Enterprise Holdings Bhd’s (Dayang) earnings could witness further improvements in the second quarter of 2015 (2Q15).
AllianceDBS Research Sdn Bhd (AllianceDBS Research) in a report yesterday said the oil and gas (O&G) company’s earnings could pick up in 2Q15 as some of the company’s vessels have managed to secure shorter term charters to carry out work orders.
In the meantime, the research firm observed that the company’s net profit of RM34 million in 1Q15 was flat as seasonally, the first quarter work orders were slower.
Concurring with AllianceDBS Research is RHB Research Institute Sdn Bhd (RHB Research) which observed that Dayang’s financial performance in 1Q15 was similar to the corresponding quarter in the past three years.
The research firm noted that typically, weather conditions affect O&G activities at the start and end of the year.
Also, some of Dayang’s vessels that were off-hired are currently deployed for work.
Additionally, AllianceDBS Research said Dayang’s profit margins improved quarter-on-quarter (q-o-q) attributed to higher value work related to the Bardegg 2 Baronia job which was awarded to the company in November last year.
Dayang’s forward earnings are supported by the company’s RM3.8 billion orderbook which offers 3.5 times revenue cover while 80 per cent of the orderbook consists of five-year hook up and commissioning (HUC) contracts which commenced in 2014.
AllianceDBS Research said the company’s other contracts are for topside maintenance activities and have long tenures of three to five years.
To note, Dayang in a filing to Bursa Malaysia on Monday said 1Q15 turnover grew by seven per cent year-on-year (y-o-y) to RM190.05 million.
In its notes accompanying the results, Dayang noted that the higher revenue was attributed to higher value of work orders received and performed in the reporting quarter for the new Bardegg Baronia job that was awarded to the company in November last year.
Dayang noted that its profit before tax (PBT) in 1Q15 increased by 12 per cent y-o-y due to higher profit margin contribution from the work orders performed as compared to 1Q14.
Furthermore, Dayang said the group’s associate, Perdana Petroleum Bhd contributed approximately 5.4 per cent to the PBT of the group for 1Q15.
With a strong orderbook which could last until 2018, analysts believed that the company’s near to medium term earnings remains sustainable.