DAYANG (5141) - DAYANG - A Brighter 2017

DAYANG (5141) - DAYANG - A Brighter 2017

Dayang’s full year FY16 revenue fell 10.8% YoY to RM694.6m while earnings came in at RM54.3m (-68.2% YoY). Revenue met 100.0% of both ours and consensus’ estimates, but earnings were a great miss. The weaker result is due to the lower vessel utilisation and reduced value of work orders received and performed in FY16. We believe the Group’s overall performance have been showing signs of improvement since 3QFY16, encouraged by increased activities and Dayang’s efforts to aggressively bid for both domestic and international tenders. We maintain our Neutral recommendation on Dayang for the interim with an unchanged TP of RM0.86 pegged to 8x PE multiple on FY17F EPS of 10.7sen. Noting that we have adjusted our FY17F-FY18F revenue between -2% and -7% and earnings estimates -18% respectively, we reiterate that Dayang remains a strong contender for more jobs going forward with its execution capabilities and positive track record with its clients, and as Petronas recalibrates its budget and capital expenditure plans, leaving it potentially poised for upside ahead.

• QoQ. 4QFY16 revenue slipped to RM185.6m (-8.9% QoQ), with a net profit of RM47.1m. This was owing to better contributions across all segments, mainly supported by higher vessel utilization rates and also an unrealized forex gain of RM41.4m. We do note that 4Q for the Group is traditionally a weaker operations quarter due to the monsoon season. Dayang’s restructuring strategies for Perdana continues to reflect positive results with a 55.3% YoY higher contribution from the marine charter division in FY16 versus the corresponding year, which would continue to elevate both theirs and Perdana’s performances.

• FY16 saw lower earnings (-68.2% YoY), largely attributed to the lower PBT from an amortization charge of RM12.9m for the intangible assets arising from existing charter contracts between Perdana and its customers which expires in 2018 (these assets will continue to be amortised until 2018). Overall the weaker performance was driven by lower vessel utilisation and lower value of work orders received and performed in the current period.

• Maintain Neutral. The Group anticipates more maintenance jobs ahead as Petronas recalibrates its budget. In the interim however, Dayang’s core activities have seen improvements with its long term call-out contracts worth c.RM3.0bn to last at least until 2018 which has secured more work orders, supported by an outstanding tender book of c.RM4.0bn. To recap, for a call out basis contract structure, the client often does not have a fixed work order schedule and therefore will call for work orders at any amount and at any time period during the contract duration.

Source: PublicInvest Research - 23 Feb 2017


DAYANG (5141) - DAYANG - A Brighter 2017

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