KUCHING (May 20): Dayang Enterprise Holdings Bhd (Dayang) saw its core net profits for the first quarter of financial year 2022 (1QFY22) of RM9.3 million coming broadly within expectations.
The profits – arrived after adjusting for non-core items such as unrealised forex, and insurance claim – were deemed to be broadly within expectations at 15 per cent each of both Kenanga Investment Bank Bhd (Kenanga Research) and consensus full-year estimates, given the seasonally weak 1Q amidst the monsoon.
“The results were sequentially weaker due to the monsoon, but better year on year (y-o-y),” it said in its notes. “Sequentially, 1QFY22 saw core net profit plunging 78 per cent quarter on quarter (q-o-q), due to works being hampered by the monsoon.
“Vessel utilisation was lower at 25 per cent versus 38 per cent last quarter.
“However, y-o-y, the quarter saw a turnaround from losses mainly due to revival of work orders given the reopening of borders. Vessel utilisation also improved to 25 per cent versus 20 per cent last quarter.”
Backed by its current order-book of RM1.8 billion, Kenanga Research saw that Dayang’s outlook is expected to gradually improve throughout the year given the revival of projects after two years of intermittent stop-starts.
“We have highlighted Dayang to be one of the key beneficiaries of Petronas’ latest activity outlook for 2022-2024, which guided increased demand for offshore maintenance, construction and modification (MCM), and hook-up and commissioning (HUC) works.
“We maintain our outperform call for Dayang with unchanged target price of RM1 – pegged to 0.8 times its profit to book value, broadly in-line with 0.5 standard deviation discount from the stock’s mean valuation. We also made no changes to our FY22-23E numbers post results.
“With the prospect of the stock’s improving outlook and high oil prices, we believe the stock’s current risk-to-reward ratio seems attractive at this juncture.”