Dayang Enterprise Holding (Dayang) announced that it has secured a contract from Petronas Carigali for the provision of Accommodation Work Boats (AWB) for its Dayang Berlian vessel. This is the fourth contract after it secured three in February 2023 for its other vessels, Dayang Zamrud, Dayang Opal and Dayang Ruby. We believe Dayang will continue to capitalise on the tight current vessel market and would have better bargaining power in negotiating the upcoming contracts for the remaining few vessels within its portfolio, such as Dayang Nilam and Dayang Pertama. Additionally, Dayang’s outlook remains robust on the back of its RM1.4bn orderbook from offshore topside maintenance services (TMS). We make no changes to our FY23 - FY25 forecasts, having already accounted for the higher daily charter rates (DCR). We maintain our Outperform call and TP of RM1.74 based on 14x PER multiple over FY23 EPS.

• Dayang Berlian. The contract being assigned to Dayang Berlian is for a period of 207 days effective from 17 Feb 2023 with the option to extend up to 90 days (11 Dec 2023), covering non-monsoon period. Although the value of the contract has not been disclosed as it is based on work orders issued, we estimate the DCR ranges from RM70,000 to RM90,000, similar to previous contracts announced in February 2023. Thus, this brings the estimated contract value to between RM14.5m and RM26.7m. Including this contract, Dayang currently has 4 contracts with Petronas Carigali, which represent 100% of the estimated work boats requirement in the recent Petronas Activity Outlook (PAO) for FY23.

• Positive outlook. We believe Dayang would have better bargaining power in negotiating new contracts for its remaining vessels such as Dayang Nilam and Dayang Pertama due to the tight vessel market. Meanwhile, Dayang’s offshore TMS segment remains the key earnings driver with current orderbook standing at RM1.4bn. We expect more contracts will have upward revisions on the back of higher activity requirement for offshore Maintenance, Construction and Modification (MCM) in FY23.

Source: PublicInvest Research - 22 Mar 2023