Dayang Enterprise Holding (Dayang) announced that it has secured a contract from Petronas Carigali for the provision of Accommodation Work Boats (AWB) for its Dayang Pertama vessel. This is the fifth contract from Petronas, after the earlier three in February 2023 (Dayang Zamrud, Dayang Opal and Dayang Ruby) and one for Dayang Berlian in March 2023. This validates our view on Dayang’s ability to capitalise on the tight vessel market and will continue to do with ongoing tenders for its remaining vessels, Dayang Nilam (AWB) and Dayang Maju (Landing Craft). Meanwhile, its offshore topside maintenance services (TMS) segment outlook remains solid and is on an upward trajectory despite recent oil price moderation. Our forecast remains unchanged, and we maintain our Outperform call with target price of RM1.74.

• Dayang Pertama. The contract being assigned to Dayang Pertama is for a period of 129 days effective from 17 Mar 2023 with the option to extend up to 60 days (22 Sep 2023). The duration of this contract is mainly to cover non-monsoon season (2Q 2023 & 3Q 2023) which is typically the peak period for offshore maintenance activities, though shorter than the previous four contracts (>200 days). While Dayang did not disclose the value of this contract, we estimate the Daily Charter Rate (DCR) is similar to previous contracts, ranging from RM70,000 to RM90,000. Thus, this brings the estimated contract value to between RM9.0m and RM17.0m. Including this contract, Dayang currently has five AWB vessel contracts with Petronas Carigali.

• Outlook remains intact. The offshore support vessel (OSV) market remains tight due to high demand from offshore activities, with supply yet to fully recover from multiple industry downturns from a decade ago. Thus, we reckon Dayang remains in a favourable position to secure contracts with better DCR for its remaining vessels (Dayang Nilam and Dayang Maju). Meanwhile, Dayang’s offshore TMS segment outlook remains solid and is on an upward trajectory on the back of higher requirement for Maintenance, Construction and Modification (MCM) and Hook-Up and Commissioning (HUC) works in 2023 and onwards due to backlog activities and more producing fields. We believe the current oil price volatility will not change this upward trajectory as conditions remain manageable for oil producers, underpinned by record profits in 2022.

Source: PublicInvest Research - 7 Apr 2023