• Maintain TRADING SELL (TP: RM2.25). Dayang Enterprise’s (Dayang) 1HFY24 core earnings of RM168mn (+156% YoY) was above both our and consensus’ estimate at 74% and 67% respectively. 2Q24 surged 59% YoY to RM130mn driven by (i) robust activities in maintenance, construction and modification (MCM) and hook-up and commissioning (HUC) projects, and (ii) higher vessel utilisation rate of 91%. The company declared first interim DPS of 3sen which is higher than 1H23 DPS of 1.5sen. We raised our FY24-26F earnings forecast by 16-25% on stronger income from marine segment. Given its strong stock price over the past 12-months, we think this reflects the market’s full optimism on its earnings growth potential in FY24F. Hence, we advise investors to take this opportunity to lock in profit. Maintain Dayang as a TRADING SELL with higher DCF-derived TP of RM2.25 (from RM1.79) that implies 8x FY25F P/E.

• Key highlight. Topside maintenance services (TMS) segment revenue rose 97% QoQ and 52% YoY to RM274mn due to more work orders/contracts being awarded by oil majors. This trickled down to its PBT that grew by 158% QoQ and 67% YoY to RM128mn. Meanwhile, marine segment recorded almost full utilisation at 91% (2Q23: 46%) amidst shortage of vessel for offshore production and operation activities.

• Earnings forecast. We raised our FY24F/FY25F/FY26F earnings forecast by 25%/18%/16% (refer to Table 4) as we raised income from marine segment.

• Outlook. As at June 2024, the company’s orderbook from call-out contracts is estimated at RM1.39bn (1Q24: RM1.7bn). The company is set to boost its orderbook pending the result announcement of new umbrella contracts for MCM and HUC.

Source: BIMB Securities Research - 23 Aug 2024