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Singapore Investment



The oil market is currently facing challenges, such as concerns about an economic recession leading to a drop in oil prices. At the same time, the development of renewable energy and increasing environmental awareness are also accelerating the transition of many countries and regions towards renewable energy.

However, with the increasing global economic activities, the demand for oil is expected to gradually increase. According to the report by Saudi Aramco, a state-owned oil company in Saudi Arabia, global oil demand is expected to reach around 140 million barrels per day by 2030. Furthermore, although renewable energy is developing rapidly, oil will still be one of the main sources of energy globally for the next few decades.

Today, I will be sharing about Dayang Enterprise Holdings Berhad (DAYANG, 5141), an oil and gas service provider with a strong order book.

First, let me briefly introduce this company.

DAYANG, which was founded in 1980, is a comprehensive oil and gas service provider based in Sarawak. The company's initial business was trading hardware materials and providing human resources to the offshore oil and gas industry. Over time, the company's business has expanded to maintenance services, fabrication, hook-up and commissioning, and marine vessel chartering. For the record, DAYANG successfully listed on the main board of Bursa Malaysia in 2008.

In terms of its corporate structure, DAYANG has a streamlined and clear organizational structure, with three wholly-owned subsidiaries operating its businesses: Dayang Enterprise Sdn Bhd (DESB), DESB Marine Services Sdn Bhd (DMSSB), and Fortune Triumph Sdn Bhd (FTSB).

According to the company's annual report, DESB is responsible for topside maintenance services, small-scale fabrication, offshore hook-up and commissioning; DMSSB owns marine vessels and is responsible for vessel chartering; FTSB provides equipment rental. Additionally, DAYANG holds a 63.69% stake in Perdana Petroleum Berhad (PERDANA, 7108), a listed oil and gas company that mainly provides offshore support services to the oil and gas industry.

Based on the 2022 annual report, DAYANG's main revenue comes from topside maintenance services (TMS), which accounted for around 64.51% of the total revenue in the fiscal year 2022. The next largest contributor was integrated hook-up and commissioning (IHUC) services, contributing approximately 20.75% of the revenue, followed by marine vessel chartering (Marine Charter), which contributed about 14.75% of the revenue.

Regarding its financial situation, as of the end of 2022, DAYANG's total assets were RM2,361.77 million, revenue was RM984.18 million, and net profit was RM124.24 million. Compared to the low base in 2021, the company's revenue and net profit increased by 47.39% and 138.96%, respectively, and the company successfully turned a profit for the full year. This was mainly due to the economic recovery and rising oil prices, as well as increased contract orders from oil giants. The annual vessel utilization rate also increased from 44.00% in 2021 to around 60.00%.

On the other hand, the company's cash flow was stable, and its debt gradually decreased. In addition, the company's annual dividend for the fiscal year 2022 was as high as RM0.030, to reward its shareholders.

Looking to the future, with the recovery of Malaysia and international economic activities, the company is expected to win more new tenders for maintenance, construction, modification, and hook-up and commissioning. The management expects customers to increase their capital expenditure for maintenance for the sake of increasing the production and productivity of crude oil and natural gas.

It’s worth mentioning that DAYANG has a robust order book. As of December 2022, the company held approximately RM1,400.00 million worth of contract orders. In addition to a recent contract awarded by Petronas Carigali, the company also secured four Accommodation Work Boat* (AWB) contracts in February and March of this year. Hence, DAYANG has secured five AWB contracts this year. However, the company has not disclosed the overall contract value as they are on a demand basis and subject to requirements.

*An Accommodation Work Boat is a vessel specifically designed to provide accommodation and workspace for crew and staff. These boats are typically equipped with necessary equipment and facilities to ensure adequate comfort and safety for personnel during offshore tasks such as underwater maintenance, oil and gas exploration, and offshore construction

According to the survey, the daily charter rate (DCR) now ranges from RM70,000.00 to RM90,000.00. Compared with the DCR of RM50,000.00 to RM70,000.00 a year ago, the price has risen. As a result, DAYANG is anticipated to continue to perform well in the future.

Considering DAYANG's current Price to Earnings (PE) ratio of only about 12.30 times, how do readers view the company's prospects?



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