• Keep BUY, new MYR3.82 TP from MYR3.90, 70% upside with 3% yield. Post updates to our ESG scoresheet for the energy sector stocks under our coverage, we trim our ESG score for Dayang Enterprise to 2.6 from 2.7, and adjust our TP accordingly. We believe the group needs to establish a more clearly defined low-carbon strategy, including specific long-term targets and comprehensive emissions disclosures, to enhance its credibility in pursuing sustainability goals.

• The positives. DEHB continues to prioritise minimising and managing its greenhouse gas emissions, with its fleet in compliance with the Ship Energy Efficiency Management Plan (SEEMP), as required under the International Convention for the Prevention of Pollution from Ships (MARPOL). In FY23, DEHB reported zero spillage incidents and expanded its disclosures on energy consumption and GHG emissions. Additionally, the group recently began reporting its Scope 1 and 2 emissions, marking an important step towards improved transparency in its sustainability practices.

• Areas for improvement. DEHB stands out as the only company within our coverage without clear, defined emissions reduction targets or a long-term decarbonisation roadmap, such as a net-zero goal. This absence of formal targets raises concerns about the company’s alignment with industry-wide and investor expectations for emissions reductions. Furthermore, DEHB has yet to disclose Scope 3 emissions, which would provide a more comprehensive view of its carbon footprint and align it with global reporting standards. Setting measurable targets and enhancing the breadth of its emissions disclosures would strengthen DEHB’s sustainability positioning.

• ESG score update. Reflecting these factors, we have revised DEHB’s ESG score downwards to 2.6 from 2.7. This adjustment accounts for the need for a defined low-carbon pathway, including long-term targets and expanded emissions disclosures, to support a credible sustainability trajectory.

Source: RHB Securities Research - 18 Nov 2024