KUCHING: Sarawak-based oil and gas (O&G) service provider Dayang Enterprise Holdings Bhd (Dayang) which commenced as a trading company, is now a force to be reckoned with in the topside structural maintenance (TSM) business.
James S K Ling
Lately, Dayang has been the favourite pick of both analysts and investment banks in terms of Sarawak counters considering that its core scope of work is continuous maintenance which is a critical part of the industry it flourishes in.
The company was founded in 1980 by James S K Ling, who is also the current executive deputy chairman. Helming Dayang for the past 30 years, he recently met with The Borneo Post and provided a brief insight into the past, present and future of this dynamic and growing entity.
According to him, in the early years Dayang depended only on its trading business and in the first decade it also ventured into the supply of semi-skilled manpower to a multinational corporation. In 1991, Dayang managed to secure topside structure maintenance contracts from Sarawak Shell and Sabah Shell, which in turn was the starting point of a new direction for the company.
Joe Ling Siew Loung
“There were two contracts that we were fortunate to secure, one was based on living quarters (offshore) and one was based on a pending support vessel (PSV),” he said.
From its maiden TSM contract, Dayang managed to secure more contracts and carve itself a niche in the industry. “In 2005, we ventured into the marine business by building our own vessels and packaged it with our engineering services. Since then, we have become more competitively priced for our clients. That is one of the reasons why we keep securing contracts steadily,” James added.
Recently, Dayang secured a topside maintenance contract from Petronas Carigali Sdn Bhd (PCSB) worth RM802 million. The contract was notably a ‘call-up’ contract made up of work orders which would be awarded at the discretion of PCSB during the duration of the contract and the values of the work orders were based on the contract schedule of rates. With the new contract, its order book swelled to RM1.6 billion and was expected to last until 2016.
“Notably, this is the largest contract that we have secured in the history of Dayang. Last year in April, we also secured one contract from Sarawak Shell and Sabah Shell, which was slightly more than RM300 million and it is still on-going,” James explained.
When asked on the impact of this win, its deputy managing director Joe Ling Siew Loung pointed out that the company had over the years built up a strong track record and recognition from industry players.
He further explained that this was a continuation to previous contracts except that now, the scale was getting bigger and the scope was getting wider.
“This is not something new that we are venturing into. We have been doing this for the past twenty years and it is very much part and parcel of our core business and this is where our core expertise is. Obviously the value has increased, the amount of work is also increasing in the industry and platforms are ageing.
The current scenario is that clients are also very much talking about integrity of the platform,” said Joe.
“First, you need to have integrity before you can increase your production. If you do not have the integrity of the platform, you would not be able to push the production. I think this is something that clients are starting to come down to it,” he emphasised.
Dayang has worked towards the changing industry requirements and has gained a strong reputation and now has managed to secure the largest contract. “We are very much hands on. We need to make sure that we are able to make money and bring value to the shareholders,” he added.
Dayang is slated as one of the best service providers for the oil and gas (O&G) industry in Malaysia as far as topside maintenance is concerned. Currently it has five to six vessels and the numbers will increase as and when required. The company also directly employs its core staff to execute its contracts.
Back in 1980, the company started with just four staff to a total workforce of 1,850 now. James pointed out that Dayang was going to increase its workforce because of the recently secured contract. Over the last 20 years, Dayang has successfully executed an impressive RM2.4 billion worth of contracts.
According to James, Dayang was building a new vessel which was slightly bigger than the current one. It could support up to 200 people at one time compared with the current capacity of 189 people. The vessel is scheduled for delivery by the end of this year.
He said that Dayang would try to market this particular vessel overseas to get a better daily charter rate (DCR). “There is still a very good market for this sort of specialised equipment in the form of workboats during the condusive weather conditions, especially from March until end of this year.”
On prospects for chartering the upcoming vessel, James highlighted that potential areas included Brunei and Thailand markets. He revealed that Brunei Shell Petroleum (BSP) was a potential client and there were also other oil major players in that country.
“In the coming months, we are also eyeing for more contracts by participating in tenders with other production sharing contractors (PSC). We have a healthy RM1.6 billion order book at the moment and we are not just going to stop here,” said Joe.
He believed one of the important elements within the organisation was its impressive safety record. Dayang recorded close to 20 million man hours without loss time injury since 2004 until now. “This is an added advantage for Dayang to position itself as a strong and proactive player.”
On the financial front, Dayang recently announced that it had posted an all time high profit after tax of RM68 million, an increase of 52 per cent from RM45 million in 2009. Its revenue rose to RM255 million from RM197 million, an increase of RM58 million or 30 per cent from the previous corresponding year.
Comparatively, the group’s revenue for the current quarter increased by 111 per cent while profit before tax and total comprehensive income increased by 266 per cent and 178 per cent respectively, when compared with the previous quarter ended December 31, 2009.
Whilst revenue increased by 111 per cent to RM43.8 million, profit before tax for the current quarter increased by 266 per cent to RM15.7 million. That was in view of the fact that the work orders in the current quarter had a higher profit margin contribution.
Considering the strong results and increasing market prospects, Dayang has transformed into a strong and reliable contender for more local contracts further from its Sarawak shores. Going forward, Dayang is still on the radar of analysts and investors and any positive newsflow on other imminent contracts will add to its flavour for future business expansions.