This represents that work activities in the oil and gas sector are continuing, with Dayang maintaining the utilisation of its vessels.
KUCHING: Dayang Enterprise Holdings Bhd’s (Dayang) offshore support vessel (OSV) contract has recently been extended by Sarawak Shell Bhd (Sarawak Shell), garnering positive views from analysts.
In a filing on Bursa Malaysia, Dayang’s board of directors announced that its wholly-owned subsidiary company, DESB Marine Services Sdn Bhd (DESB Marine), received a Contract Extension from Sarawak Shell for the provision of one unit of accommodation work boat – Dayang Opal for the Umbrella Contract for OSV services for Petronas Petroleum Arrangement Contractors’ (PACs) drilling and project activities.
While no contract value was disclosed, the research arm of Public Investment Bank Bhd (PublicInvest Research) is positive on this nonetheless as it represents that work activities in the oil and gas sector are continuing, with the group maintaining the utilisation of its vessels.
“We are positive on this extension as it shows that overall work activities are still continuing albeit a slower pace, and with the group being able to maintain its vessel utilisation of 60 per cent currently,” PublicInvest Research said.
“We make no change to earnings forecast as we have assumed this under our replenishment assumption of approximately RM200 million per year. Dayang’s outstanding orderbook remains strong at RM3.6 billion.
“While no contracts have been terminated during the recent ‘crisis’, most work orders which are largely based on call-outs would likely have been deferred to 2021 given the uncertainty and volatile oil prices then.”
Looking ahead, while Dayang’s fourth quarter of financial year 2020 (4QFY20) results in February is likely to be affected by bad weather and possible lagged effects of oil majors’ capex reduction, the research arm foresees the group poised for strong earnings recovery in FY21 on the back of solid orderbook in hand.
“This is in tandem with progressive recovery in sector dynamics for 2021.”
All in, PublicInvest Research maintained its FY20-FY22 forecast, having assumed it in its replenishment assumptions.
As such, FY20-FY22 core net profit forecasts for Dayang remained at RM52.4 million, RM110.4 million and RM162.5 million, respectively.