Dayang Enterprise (Dayang) secured a contract for the provision of integrated hook-up (iHUC) services from PETRONAS Research SB, a PETRONAS research outfit with focus on advisory and technology development services for the PETRONAS Group. There is no disclosure on the contract value, however. Based on our checks, the estimated contract value could be ~RM10m for a 1 (+1)-year duration. The contract value is relatively small as compared to other iHUC contracts as the work is still in the pilot phase, in relation to renewable energy development on the offshore topside platform. There is scope for further upside if the work done is proven economical to scale up. We deem this as part of orderbook replenishment and make no changes to earnings estimates. Nevertheless, we are upbeat on the Group’s outlook after our recent meeting post-1QFY23 result which reaffirms our positive view on Dayang, with earnings expected to return to full swing from 2Q onwards, and some expiring contracts expected to be extended with upward revisions. We retain our Outperform call and TP RM1.85.

• A pilot project. The contract value from PETRONAS Research is relatively small as compared to other iHUC contract from PETRONAS Carigali. This is because the research outfit is focusing on new technology development for wind turbine installation on offshore topside platform. There is scope for further upside if the technology is proven economical to scale up and able to be replicated on other platforms.

• Bright outlook ahead. We are upbeat on Dayang’s outlook after our recent meeting post-1QFY23 result which reaffirms our positive view on the Group, with earnings expected to improve in 2Q and 3Q FY23, post monsoon season. Some contract executions that were delayed due to unavailability of vessel from the client suggests that the offshore support vessel (OSV) market remains tight. Dayang could benefit from this if it can source its own vessels under a cost plus structure to the client. We also believe Dayang could secure contract extensions with upward revisions from its major contracts in the current orderbook of RM1.3bn due to tight timelines for clients to issue out new tenders.

Source: PublicInvest Research - 9 Jun 2023