We still see more upside for DEHB, which has rallied by some 22.6% since our 18 April upgrade. We  raise the value of company’s  expected contracts to be secured from the Pan Malaysia HUC project to MYR2.5bn vs MYR2.0bn previously on account of this buoyant sentiment. This lifts our FY13F and FY14F earnings by 10.5% and 16.4% respectively. Maintain BUY, with a higher MYR5.00 FV vs MYR4.30 previously.

MYR2.5bn worth of orders expected. Our channel checks suggest that Dayang Enterprise (DEHB) is a strong contender for jobs from the Pan Malaysia hook-up and commissioning (HUC) project. On the back of our new order win assumption of MYR2.5bn vs MYR2.0bn previously, this may translate into an annual orderbook replenishment of MYR500m, compared to our previous forecast for MYR400m.  

Raising FY13 and FY14 forecasts. Our assumptions for orders of higher value push up our FY13 and FY14 revenue forecasts by 10.0% 
and 14.0% respectively while our net profit assumption is raised by 10.5% for FY13 and 16.4% for FY14.  

Recent win to boost orderbook to MYR1.5bn. On 6 May, the company secured a MYR313.6m order from Murphy Sarawak Oil. This contract, which boosted the company’s  total orderbook to about MYR1.5bn, is expected to last until 2016.

Nudging up FV to MYR5.00 from MYR4.30 previously. All in all, we advocate that investors hang on to their DEHB shares. The stock is currently valued at our revised 15x FY14 EPS. The stock, our top mid-cap oil & gas pick, is still a BUY. Its higher-than-expected contract wins from the Pan-Malaysia HUC project is a potential re-rating catalyst.

Source: RHB