KUCHING: Despite the fluctuation in crude oil prices, Dayang Enterprise Holdings Bhd’s (Dayang) fundamentals remain strong and is poised to achieve record earnings for financial year 2014 (FY14) ending December.
Given the stellar financial performance of the oil and gas company for the third quarter of 2014 (3Q14) ended September, Dayang’s executive deputy chairman Datuk James Ling believes the company’s strong earnings momentum is expected to continue due to recognition arising from the progress of Pan Malaysia’s hook-up commissioning (HUC) projects with Petronas Carigali Sdn Bhd and Sarawak Shell Bhd/Sabah Petroleum Company Ltd as well as its strong outstanding orderbook of RM4 billion which could sustain its earnings until 2018.
Ling is confident that Dayang’s earnings for FY14 will reach an all time high since the company’s listing in 2008.
“For FY14, we are confident that our profit will be one of the highest. Conservatively, we are looking at about RM170 million in net profit for FY14 supported by the Pan Malaysia job.
“At the moment, the ongoing Pan Malaysia hook-up commissioning work has reached 25 per cent completion.
“Dayang is currently busy executing the Pan Malaysia job and the profit we have generated will be re-invested back to the company for the benefit of the shareholders,” he told The Borneo Post during a recent interview.
Ling also revealed that Dayang has recently been awarded a contract for the Baronia’s enhanced oil recovery (EOR) project for topside maintenance services estimated to be close to RM400 million.
He observed the company’s job in hand together with the latest contract award will enable Dayang to maintain its earnings momentum into 2015.
Dayang’s good track record in executing works together with the company’s strong management team as well as experienced staff who worked for the company for many years have enabled the company to receive many successes.
Ling further observed Dayang was also recognised for completing its work ahead of schedule by major oil corporations and being certified for quality work performed and meeting their stringent requirements.
On another note, Dayang has invested more than RM30 million for fabrication yard in preparation for further oil and gas jobs.
“The company has recently bought a piece of land measuring 10 acres in Labuan which will be turned into fabrication yards in preparation to cater for more contracts in the future.
“The land will be divided into three parts which will be used to cater for different oil and gas players,” he said.
Dayang had earlier invested to buy a total of eight acres of industrial land for fabrication yard, warehouses and general equipment in Labuan.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) in a report noted Dayang’s is preparing for its next stage of growth into the engineering, procurement, construction and commissioning (EPCC) of the oil and gas industry.
MIDF Research observed the oil and gas company has invested a few millions to purchase new fabrication yards in Labuan and is planning to invest more capital expenditure for fabrication yard equipment as well as beefing up its workforce for potential new jobs.
The research firm highlighted the oil and gas company’s earnings for 3Q14 ended September hit a new high, with its net profit at RM58 million, a significant jump of 82 per cent year-on -year (y-o-y) from RM31.97 million in 3Q13.
MIDF Research explained that the solid earnings were contributed by the company’s offshore segment which recorded earnings of RM44.2 million for 3Q14.
It added that the profitability margins of Dayang also rose for all business segments.
“Generally, the stellar earnings were as a result of higher value of work orders received and performed in (3Q14) for the new hook-up and commissioning contracts that were awarded in May 2013,” MIDF Research analyst Aaron Tan said.
As for the near term outlook, Ling remains cautious on the company’s financial performance for FY15 due to fluctuation of the crude oil price and the cyclical nature of the oil and gas industry.
In spite of that, he foresees Dayang will still be able to register a set of solid financial performance for FY15.