Daya posted a net profit of RM19.7m for the year ended Dec 31, 2012, an increase of 13% y-o-y from RM17.4m, contributed largely by higher profit margins from the O&G segment. Revenue for the year declined slightly by 3% however, to RM274m from RM282m previously, due to lower revenue contributions from the Technical Services segment. Daya, in our view will maintain its strategy of targeting more O&G contracts in both the upstream and downstream segments. We continue to like Daya given its healthy financial position and attractive growth prospects in the oil and gas space.

FY2012 PBT +18.7% y-o-y to RM28.2m, boosted by higher profit margins contributed largely by the O&G and Trading Services segments. The polymer segment continued to weaken however as a result of intense foreign competition, notably China. Segmental contribution only amounts to 7% of Group revenue, underlining its growing insignificance, and lesser of a worry. Incidentally, the segment is up for sale.

Outstanding order book at RM1.8bn. Daya‟s outstanding order book worth RM1.8bn (RM515m O&G; RM1.3bn Technical Services segment) has grown significantly vis-à-vis its small market capitalisation. We see Daya securing another RM1bn worth of contracts going forward, at the very least, most of its O&G-related.

Seeking to gain exposure. Apart from the TL Offshore subsea contract worth about RM186m which will commence from March to Nov 2013, Daya is making good progress in expanding from its existing businesses into new areas, which may see the Group potentially securing the Petro Vietnam and Marine HVAC contracts worth some RM250m and RM300m respectively. Meanwhile, we gather that its first vessel, Siem Daya 1 is currently in negotiation phase for a long-term charter rate of approximately RM600m over the term.

Reiterate Outperform call. We uphold both our earnings estimate and target price of RM0.28. We believe the current valuations remain attractive given its growth potential going forward. Our valuation of Daya is based on 12x multiple over FY13 EPS of 2.34 sen.

Source: PublicInvest Research - 28 Feb 2013