1QFY13 core earnings of MYR25.4m (excluding the reassessment of its MYR33m investment in PETR), was in line with our estimates. We believe that it can easily meet our earnings forecast as it has secured MYR2.3bn in new orders YTD. Although the stock is a NEUTRAL for now, we still see ample room for an earnings upgrade if it bags more jobs from the Pan-Malaysia HUC project.

In line. Dayang Enterprise (DEHB)’s 1QFY13 core earnings surged to MYR25.4m (+86.1% q-o-q, +61.5% y-o-y) to match our estimates, although this excludes the reassessment of its MYR33m investment in Perdana Petroleum (PETR) (Neutral, FV: MYR1.75). Although its core earnings only accounted for 19.1% of our FY13 estimate, we consider this in line as the group’s operations are usually dampened by bad weather conditions at the beginning and end of the year.

Revenue growth intact. DEHB’s1QFY13 revenue improved to MYR87.9m (+4.0% q-o-q, +17.5% y-o-y) owing to a higher fleet utilization and heightening topside maintenance services. Although the revenue made up only 16.0% of our FY13F numbers, we believe that the company can achieve our full-year forecast, having landed MYR2.3bn worth of jobs from the Pan-Malaysia hook-up commissioning (HUC) project. 

Possible upside to our estimates. There are still contracts from the Pan-Malaysia HUC project yet to be awarded. We understand that DEHB has set its sights on landing another job from this project. As such, there may be upside potential to our earnings estimate if the company secures an anticipated MYR200m worth of orders.

Maintain NEUTRAL. Following the release of the company’s annual report yesterday, we took a retrospective look at its FY12 numbers and tweaked our financial model. We retain our NEUTRAL recommendation on the stock for now, at least until the company secures contracts with a higher-than-expected value from the Pan-Malaysia HUC project.

Source: RHB