Dayang reported that it has secured three contracts for the provision of Accommodation Work Boats (AWB) for Petronas Carigali. Each contract has been assigned to each vessel i.e Dayang Zamrud, Dayang Opal and Dayang Ruby, While the value of the contracts was not disclosed, we are positive on this development as it validates our earlier view on the tight vessel market likely to benefit Dayang, subsequently translating into higher daily charter rate (DCR) and maximising the vessel’s utilisation rate. Additionally, the Group’s offshore topside maintenance services (TMS) outlook remain robust with the outstanding orderbook currently standing at RM1.4bn. We maintain our FY23 - FY25 forecast, having already accounted for the higher DCR in our recent revision. We re-affirm our Outperform call and TP of RM1.74.

• The three contracts. Each contract has been assigned to each vessel i.e Dayang Zamrud, Dayang Opal and Dayang Ruby for the similar period of 214 days effective from 3 Feb 2023 with the option to extend up to 60 days (4 Nov 2023), capitalising on the non-monsoon period. While the value of the contracts have not been disclosed as it based on work orders issued, assuming the DCR is at around RM70,000 to RM90,000, we estimate each contract will be in the range of RM15m to RM25m. This brings the cumulative value of all three contracts to between RM45m and RM75m. Petronas’ Activity Outlook (PAO) estimates the requirement of four work boats for FY23. Thus, these three contracts already translate to 75% of its requirements.

• Healthy outlook. In addition to the bright outlook on marine charter services, we are also optimistic on the Group’s offshore TMS. The segment’s orderbook is currently at RM1.4bn. We expect more contracts will be awarded in the future or will have upward revisions during renewals. This is on the back of higher offshore Maintenance, Construction and Modification (MCM) activities requirement in FY23, higher to 11.9m (+37% YoY) man-hours from just 8.7m man-hours in FY22 based on PAO.

Source: PublicInvest Research - 28 Feb 2023