INVESTMENT HIGHLIGHTS

• Dayang Enterprise’s 1QFY19 reported loss improved by +80.6%yoy to –RM4.2m

• Revenue grew by 5.1%yoy to RM156.4m premised on higher work orders

• Perdana Petroleum registered narrowed loss of –RM32.9m

• Orderbook of RM3.0b to last until 2023

• Maintain BUY with unchanged TP of RM1.30 per share

Reported loss narrowed by +80.6%yoy. Dayang’s 1QFY19 reported loss narrowed by +80.6%yoy to –RM4.12m from RM21.4m in 1QFY18 in its seasonally weaker quarter. That said, the company’s revenue grew by +5.1%yoy to RM156.4m driven mainly by higher work orders received and performed under the topside maintenance contracts during the quarter when compared against last year.

Perdana Petroleum continues to show improvements. Perdana Petroleum continues to show improvements with a reported net loss of –RM32.9m vs -RM66.7m in 1QFY18 attributable to higher vessel utilisation rates of 36% compared with only 27% in 1QFY18. Revenue was also higher by +35.0%yoy despite the seasonally weaker quarter due to the adverse weather condition.

Higher work orders drove earnings. The company delivered its highest quarterly earnings in 1QFY19 despite the quarter being seasonally weak quarter for the company due to the monsoon season. However, during the quarter, offshore activities were ramped up and works continued to be issued under time write (unit rates) and lump sum works. This is also premised on robust work orders issued for the Maintenance, Construction and Modifications Contract (MCM) and Topside Maintenance Services works under the Pan Hook-up and Commissioning Contract (Pan HUC) which were rolled out in the fourth quarter. Furthermore, vessel utilisation was also stronger at 36% vs 27% in 1QFY18.

Orderbook of RM3.0b to last to 2023. The company also disclosed after securing a larger portion of the Pan MCM contracts estimated at RM1.5-2.0b for the next five years, this brings its total orderbook to RM3.0b lasting the company through to 2023. The company is currently participating in bids worth about RM600m – both locally and overseas. The company remains fairly confident of winning a portion given its track record and successful campaigns in similar projects.

Source: MIDF Research - 24 May 2019