KUCHING: Shares in Dayang Enterprise Holdings Bhd (Dayang) rose on Bursa Malaysia yesterday following news of its subsidiary, Perdana Petroleum Bhd (Perdana Petroleum) winning the award for a spot charter marine vessels services contract from Petronas Carigali Sdn Bhd (PCSB).
Yesterday, Dayang’s shares closed one sen higher at RM0.97 with 1.12 million shares traded.
Perdana Petroleum’s wholly-owned subsidiary, Perdana Nautika Sdn Bhd, won the award for a three year duration with an optional extension of 2 years exercisable by PCSB.
Under this contract, Perdana was awarded four packages under an umbrella contract terms to provide marine vessels for the following categories: anchor handling tug/supply vessel 100MT and below bollard pull; anchor handling tug/supply vessel above 100MT bollard pull; workboat; and workbarge.
The contract also includes the provision of vessels, crew members and associated equipment for continuous 24-hour operations.
Researchers with Public Investment Bank Bhd (PublicInvest Research) were pleased as this contract affirmed the research house’s contract replenishment assumptions for Perdana going forward whilst providing earnings visibility for the duration of the contract.
“We understand that the contract also has the flexibility to utilise all of the group’s vessels under the umbrella terms for four different vessel class categories,” it said in a note yesterday.
“The contract’s total value cannot be determined, as it is dependent on the actual number of days the vessels are on-hire based on instructions from the PCSB, from time to time during the contract period,” added PublicInvest Research.
To note, the three-year contract plus two-year optional extension is with effect from March 15, 2017 until March 14, 2020.
All of the group’s vessels are placed under this umbrella contract, and therefore will see a higher utilisation for the group going forward, PublicInvest Research said.
Of current 17 vessels, seven vessels are currently chartered to Dayang for its operations.
Similarly, Kenanga Investment Bank Bhd (Kenanga Research) in its note on Dayang yesterday could not determine the value of the contract, although it remained positive as the contract award helps to improve vessel utilisation.
“Given that it is an umbrella contract, we suppose that Petronas had shortlisted five or six licensed players which qualified for technical specifications.
“Recall that Dayang is targeting to improve Perdana Petroleum’s 17 vessels utilisation to an average of 70 per cent – a breakeven level from 60 per cent in FY16. We made no changes to our earnings forecasts as we assumed 60 to 65 per cent utilisation for Perdana’s fleets in FY17 and FY18.”
As for its bread and butter business, Kenanga Research believed Dayang was well positioned to be one of the potential beneficiaries of Petronas’ five-year maintenance, construction and modification (MCM) contract — expected to be awarded by the second quarter this year — estimated between RM5 to RM6 billion.
“We gather that the contract is split into six packages and the Sarawak’s MCM portion is the biggest pie estimated at RM1.5 billion. We believe Dayang stands a good chance to win this portion being the incumbent for the Sarawak topside maintenance contract.”
All in, Kenanga Research maintained its outperform call with an unchanged target price of RM1.14 per share as it believed the group is a potential beneficiary of fresh round of contract awards given its track record in maintenance work.