Dayang Enterprise Holdings Berhad (5141)

Since Q1'24 (May 23) annoucement, Dayang has been moving sideway from 2.82 to around 2.79, so where is Dayang heading ....

Abbreviation:

mmhrs - million manhours

TMS – topside maintenance services

ZZD – author

For new investors wanting to know more about Dayang, read here and here.

UPDATES

1. Dayang has gained 68% CAGR since my first article in 2022. (See chart in Additional Data)

2. Q1 2024 result, a record:

Marine charter has become a major contributor to Revenue. This is due to higher DCR (daily charter rate). The higher DCR started from Q2’23, looks like continuing into the foreseeable future. Marine revenue has jumped 3.5 X. This will be elaborated more in coming write-up on Perdana.

TMS of 139K, almost double that of Q1’23, but only contributed 56% of total Q1’24 revenue.

While TMS from Q1’23 78M jumped to 139M in Q1’24, it only contributed 56% of Q1’24 revenue. And 247M is a record for Q1 revenue. The previous record was 190M recorded on Q1’15.

Going forward, marine sector shall be contributing a large chunk of profit, see below.

3. Director movement

ENCIK JAMALLUDIN BIN OBENG on 10 June 2024 resign as director due to personal reasons as announced. Note he is the current Managing Director of Perdana.

DATUK HASMI BIN HASNAN on 1 July 2024 resigned as director from Perdana. Datuk, Chairman of Dayang, wanted to focus on Dayang.

Both resignation improved governance and is welcome. However, En Jamalludin’s reason brings into question commitment as MD of Perdana.

FORECAST

All planned offshore activities for hook-up & commissioning and offshore maintenance construction and modification for 2024 have been contracted. This is as reported in Petronas Activity Outlook 2024-2026. See Additional Data section.

The manhours planned for 2024 is 21.5 mmhrs, very similar to that of 2019 of 22.6 mmhrs.

Thus, revenue from TMS should be maintained while revenue from marine will jump. Accounting for this, FY 2024 revenue is now revised up to RM 1.45B as below:

MARKET SENTIMENT & VALUATION

A. Dayang tested 3.09 on 13/6/24 and has then retreated to 2.63, now hovering around 2.80

B. AIA Bhd is now 2.91% shareholders of Dayang.

Price Earning Ratio (PER) varies depending on whether it is forward, trailing etc. Being conservative, average all to a PER of 16 going forward gives targets of 3.2 to 3.67.

Another valuation method is DCF (discounted cash flow). The wonderful internet provides the answer:

Depending on one’s risk appetite, Dayang could be worth 5.53 or as low as 1.19.

For WACC (weighted average cost of capital), please see section on Additional Data.

Immediate future

Dayang should be debt free by the end of 2024.

What then would Dayang do with the extra cash?

1. Increase dividend payment to perhaps 7 sens like in 2014. Or more with yield closer to 3% (10 sens)
2. Buy properties/plant/equipment to further enhance productivity and capture higher revenue (new vessels for example)
3. Bonus issue to reduce entry price, making it affordable to larger pool of investors

Risks:

1) Weather - longer monsoon, stronger monsoon; insufficient time to complete work

2) Oil price - crashing due to over production or recession in the whole world; lead to postpone work

3) Execution - insufficient manpower, lack of materials / equipment; longer to complete leading to lower profit

4) another pandemic leading to control movement of manpower

5) not able to secure new contracts beyond 2024

SUMMARY

• Q1'24 is a record quarter result due to calmer monsoon and (much) higher DCR

• Petronas said all planned TMS for 2024 has been contracted, hence revenue from TMS highly likely to be maintained at the top-end of the period since 2014

• As sure as moonsoon comes and goes, Dayang's Q2 & Q3 results will be high, much higher than before, due to (MUCH) higher DCR for the marine sector

• Dayang should be debt free by the end of 2024

• Potential higher dividend (7 to 10 sens for FY 2024)

CONCLUSION

Dayang will remains top holding within my family going forward.

ADDITIONAL DATA

Dayang primary provide services to Petronas' activities:

• HUC (Hook-up & commissioning)
• Offshore maintenance construction and modification.

These two activities is combined and known as TMS under Dayang's reporting.

Above chart combined manhours from both HUC and offshore Maintenance, Construction and Modification.

Extract from Petronas Activity Outlook 2024 – 2026 pages 57 & 59.

Noted that in both activities, all requirement for 2024 have been contracted!!!

Dayang performance

First article on Dayang – 21 Aug 2022.

Congratulation to all those investors who have profited from Dayang.

Happy investing !

Disclaimer:

I wrote this myself without pay. I and my families own Dayang shares. This is not an advice to buy / sell Dayang or any other equities / securities / assets.

Your likes (or dislike) will spur me to continue writing. And thank you for reading.

“You’ve got to have the fortitude and the forbearance to be able to look through cycles and look through the ups and downs” Piyush Gupta (DBS Group CEO)