Dayang's 9MFY12 net profit beat our and consensus expectations. The y-o-y and q-o-q improvements were attributed to higher fleet utilisation and additional revenue from the charter of its new workboat, Dayang Topaz, as well as better numbers from its marine charter business. As the company's prospects remain promising, we are raising our FY12 and FY13 earnings forecasts by 5.4% and 5.7% respectively. Reiterate BUY, based on a revised fair value (FV) of RM2.90, pegged to 13x FY13 EPS.
Above expectations. Dayang's 9MFY12 results came in above our and consensus expectations, accounting for 92.6% of our forecast and 93.9% of consensus' numbers. The company recorded revenue growth of 10.9% q-o-q and 11.8% y-o-y while net profit
surged 31.8% q-o-q and 24.0% y-o-y. The stronger-than-expected earnings were mainly due to an improvement in its marine charter business, which led to a higher profit margin for the quarter under review (2QFY12 EBIT margin: 32.3% vs 3QFY12 EBIT margin: 40.5%).
4QFY12 earnings may be subdued due to monsoon. We gather that Dayang's 4QFY12 results may be subdued as the company's customers usually slow down their activities to prepare for the monsoon season. That said, we are raising our FY12 earnings forecast by 5.2% to account for the stronger-than-expected earnings and also lifting our FY13 earnings forecast by 6.6%, underpinned by better margins.
Orderbook well above RM1.2bn. The company's current orderbook stands at some RM1.2bn, which will last it at least until 2016. We are cautiously optimistic that Dayang would soon secure contracts from the Pan Malaysia hook-up and commissioning (HUC) project and expect it to land more tenders for brownfield services, which are large in value.
Maintain BUY. We are raising our FV from RM2.75 to RM2.90 as we lift our earnings forecasts for FY12 and FY13, pegged to 13x FY13 EPS. We continue to like Dayang's solid business model, which provides recurring income and constant cash flows, and its solid balance sheet. The stock's rerating catalysts include: i) awarding of other contracts, especially from the Pan Malaysia (HUC) project, ii) Perdana becoming Dayang's associate, and iii) lower-than-expected mobilization and demobilization costs. We recently added Dayang as one of our top picks in the oil and gas sector besides Dialog and SapuraKencana Petroleum.