The research arm noted that post-award, Dayang’s order-book would stand at around RM5 billion, giving them approximately four to five years revenue visibility.
KUCHING: Dayang Enterprise Holdings Bhd’s (Dayang) latest umbrella contract win has been viewed positively by analysts, who predict that the group should be able to secure around RM150 million worth of work orders over the entire contract period.
In a filing on Bursa Malaysia, Dayang’s board of directors announced that wholly-owned subsidiary company Dayang Enterprise Sdn Bhd has been awarded a contract by CARIGALI-PTTEPI Operating Company Sdn Bhd for the provision of modification works (umbrella contract).
The filing also revealed that the duration of the contract is effective from January 30, 2020 for a period of three years with two years extension option.
“We are positive on the contract win, being Dayang’s second new win year to date (YTD), showcasing the company’s competitiveness and operational capabilities,” the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said.
“Being an umbrella contract however, we believe there would be another one to two players within the same umbrella of which Dayang would still have to compete against for work orders.
“We guesstimate the entire umbrella value to be worth approximately RM300 million to RM350 million, and as such, we reckon Dayang should be able to secure around RM150 million worth of work orders over the entire contract period.”
Kenanga Research expected operating margins to be around the low-teens percentage range.
The research arm noted that post-award, Dayang’s order-book would stand at around RM5 billion, giving them approximately four to five years revenue visibility.
“Moving forward, Dayang is expected to post stronger financial year 2020 (FY20) earnings, backed by Petronas’ rising demand for maintenance, construction and modification (MCM), although the upcoming seasonally weak fourth quarter of FY19 (4QFY19) results could somewhat dampen sentiment.
“With that said however, we reiterate that any dips from current levels could still act as an opportunistic entry.”