Dayang Enterprise’s 1H14 core profit of MYR89.0m met our and consensus estimates at 42% of FY14F. This was supported by more work orders received and performed for the hook-up and commissioning contracts. We make no changes to our earnings forecasts for now. Maintain BUY, with our MYR4.80 FV pegged to a 16xFY15F P/E. 
Earnings in line with expectations. Dayang Enterprise’s (Dayang) 1H14 revenue jumped 100% y-o-y to MYR399.0m, driven by higher contributions from the hook-up, construction and commissioning (HuCC) contracts for Shell, Murphy Oil and Nippon which are now fully mobilised.Its 1H14 core profit grew 46.3% y-o-y to MYR89.0m. The increase in revenue did not trickle down to its core profit due to vessel mobilisation and yard space costs for Petronas Carigali’s HuCC contract as well as lower-margin work orders performed for other ongoing contracts. Dayang declared a DPS of 3.5 sen for FY14. Note that our full year forecast DPSis 12.5 sen at a 50% payout ratio assumption. 
Expect a better 2H14. As of July 2014, Dayang’s orderbook stood at MYR4.2bn. Note that the MYR1.3bn Petronas HuCC contract, which isstill seeing a ramp-up in activities, is expected to be in full swing only in 1Q15. Meanwhile, we believe Petronas’ topside structural maintenance (TSM) contract stands a good chance of being extended beyond its original end period in 1Q16. If materialises, this should help boostDayang’s orderbook. Shell HuCC contract (MYR2.4bn) has been fully mobilised since end-1Q14 and is currently running at full capacity. Dayang is currently bidding for MYR400m worth of engineering, procurement, construction and commissioning (EPCC) jobs, with the outcome likely to be known by end-3Q14. 
Maintain BUY with MYR4.80 FV. We continue to like Dayang for its experience and track record as a premium service provider for HuCC and topside major maintenance (TMM) jobs. Our FV is pegged to a 16x FY15F P/E, a slight premium above the small- to mid-cap oil and gascompanies’ P/E of 15x, supported by a 45% 2-year forward earnings CAGR.

Source: RHB