Dayang reported a core net profit of RM19.9m for 3QFY21, down 40.2% YoY though significantly higher on a QoQ basis. Cumulatively, the Group reversed previous quarter’s losses to report a marginal core net profit of RM1.6m for 9MFY21, though significantly lower than the RM45.8m core net profit reported in 9MFY20. Overall performance was mainly attributed to lower efficiency levels due to movement restrictions and stricter SOPs implemented, as well as unexpected events occurring during the period. Gross and net profit margin contracted by 15ppt and 7.6ppt YTD. The numbers are in line with our projection of a full year profit of RM15.5m though below consensus’ FY21 net profit of RM34.5m. 4QFY21 results will see lower turnover as activities are typically slower due to the monsoon season. Nevertheless, earnings from FY22 onwards will improve on the back of a healthy outstanding orderbook of RM2.3bn as well as improved efficiencies given the gradual relaxation on SOPs. Maintain Outperform with an unchanged TP of RM1.35 based on 14x PER multiple over FY22 EPS of 9.68sen.

• Improvements QoQ. Dayang reported a core net profit of RM19.9m in 3QFY21, improving from a core net profit of RM6.0m in the previous quarter. This is in tandem with higher topline growth of +40.2% QoQ. The improvement is attributable to higher contribution from the offshore topside maintenance segment by +3.2% QoQ as more lump-sum work orders have been executed. Marine charter segment also saw an increase of 6.9% QoQ. Vessel utilisation was higher at 66% against 50% in the previous quarter. Gross and net profit margin expanded by 10.8ppt and 5.1ppt as a result of a gradual relaxation of SOPs given an increase in workforce capacity.

• Moving forward to FY22. 4QFY21 results will see lower turnover as offshore oil and gas activities are typically slower due to the monsoon season. We foresee improving earnings in FY22 on the back of higher workforce capacity with workers already mostly vaccinated, as well as from the absence of the required quarantine given the relaxation of SOPs. Sector activities are also expected to improve as capital expenditure by oil majors are accelerated on the back of higher oil price of above USD80/bbl. Management confirms that work orders for i-HUC worth RM220m have been deferred to next year. As of September 2021, its order book stands at RM2.3bn.

Source: PublicInvest Research - 26 Nov 2021