• Dayang’s 9M24 core net profit of RM253m (+77% YoY) met our and consensus expectations

• The stronger earnings were driven by increased service work orders, higher vessel utilisation rates and DCR

• Maintain BUY rating with RM4.50 target price. Dayang remain our sector top pick

9M24 Core Profit of RM253m (+77% YoY) Met Expectations

Dayang delivered a stronger 9M24 revenue growth of RM1.2bn (+51% YoY), driven by increased service work orders, higher vessel utilisation rate of 76% (vs. 9M23: 60%), improved daily charter rates (DCR), and stronger contributions from third-party vessel chartering. 9M24 revenue from vessel chartering surged 59% YoY, while topside maintenance rose by 50% YoY. Its 64% owned subsidiary, Perdana Petroleum, also delivered a strong 9M24 core net profit of RM82m (+100% YoY), driven by higher utilisation rate of 76% (vs 9M23: 59%) and improved DCR. EBITDA margin rose 3ppts to 43% on better operating leverage. As a result, 9M24 core net profit rose to RM253m (+77% YoY), surpassing its previous full-year record earnings of RM229m in 2019. The result came in at 89% and 84% of our, and consensus estimates, meeting expectations given the seasonally weaker 4Q24 attributed to the monsoon season.

Stronger YoY Earnings

3Q24 revenue grew 31% YoY due to higher service work orders, improved vessel utilisation at 86% (vs. 3Q23: 80%), and increased third-party vessel chartering. Revenue from topside maintenance services increased 37% YoY, while vessel chartering rose by 27% YoY. However, the 3Q24 EBITDA margin fell 1ppt to 44% due to the execution of lower-margin topside maintenance works. Nevertheless, the 3Q24 core net profit increased to RM85m (+11% YoY), supported by a higher revenue base.

Maintain BUY With RM4.50 Target Price

We make no changes to our earnings forecast. We reiterate our BUY rating and target price of RM4.50, based on a 16x PE multiple on 2025E EPS. Dayang’s all-time high RM5.2bn order book should help ease investor worries over the impact of Petronas' capex reduction on its prospects. At 8x 2025E PE, the valuation is attractive. Key risks to our BUY call include lowerthan-expected work orders, higher operating costs, and a sharp decline in global oil prices.

Source: Phillip Capital Research - 22 Nov 2024