KUCHING: Dayang Enterprise Holdings Bhd’s (Dayang) forward earnings trend will be be better, compared to losses in previous years, analysts project.
“We believe forward earnings trend will definitely be better as compared to losses in the prior two years, buoyed by its current order-book of approximately RM3 billion, providing some earnings visibility for the next three years,” the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said in its outlook on Dayang.
“This stem from its contract wins of approximately RM2 billion in financial year 2018 (FY18), consisting mostly of Pan-MCM jobs, coupled with its maiden overseas win in Turkmenistan.”
As for Dayang’s 60.5 per cent-owned subsidiary Perdana Petroleum Bhd (Perdana Petroleum), the research arm noted that the group is expected to undergo a comprehensive corporate exercise in the next 12 months, under the purview of the Corporate Debt Restructuring Committee (CDRC) of Bank Negara Malaysia.
“This could include borrowings extension, disposal of assets, special placements, and/or rights issue, and hence, we opine that it may also implicate Dayang’s shareholders.”
On Dayang’s FY18 results, Kenanga Research said that, “FY18 bounced back strongly with core profit of RM164.2 million, beating expectations by more than double of forecasts, on strong surge in work orders for its topside maintenance coupled with improved vessel utilisations.”
Post-results, the research arm raised its FY19E earnings forecast by 12 per cent after increasing its vessel utilisation and topside maintenance assumptions, while also simultaneously introducing FY20E numbers.
It’s core net profit estimates for Dayang amounted to RM106.1 million for 2019E and RM105.1 million for 2020E.
All in, Kenanga Research maintained ‘outperform’ on Dayang, given the group’s improved outlook on the back of recent contract wins and recovery in vessel utilisations.
Meanwhile, the research arm of MDIF Amanah Investment Bank Bhd (MIDF Research) maintained its FY19F earnings estimate at this juncture as it awaited further announcements on the debt restructuring for Perdana Petroleum under the CDRC of Bank Negara which is still in progress.
“We are reiterating our ‘buy’ recommendation on Dayang,” MIDF Research said.
“Our ‘buy’ recommendation is premised on large potential share upside, improving operating climate with higher activity levels and improving utilisation rate (UR) and improving conditions for Perdana Petroleum.”