Dayang Enterprise Holdings Berhad (Dayang) anticipates robust growth in its upstream maintenance segment, supported by significant contract wins and favourable market conditions, as reported by Kenanga Investment Bank (Kenanga) today (July 16, Tuesday).

Kenanga has upgraded Dayang's target price (TP) to RM3.31, reflecting a 74% increase from RM1.90, and maintains an OUTPERFORM rating. The bank highlights Dayang's strong position in the topside maintenance sector and its potential to secure major contracts, including a possible long-term deal with Petronas.

The upbeat outlook on Dayang stems from its guidance on strong margins from existing call-out contracts and anticipated bids for a major hook-up & commissioning (HUC) project. The company expects these initiatives to drive margins towards peak levels seen in previous cycles, positioning it favourably for sustained profitability amidst an upturn in the upstream maintenance sector.

Kenanga notes Dayang's prudent management of call-out contracts, revised for improved terms since 2022, which could lead to gross margins reaching 50% by FY24. The company's strategy to pursue the umbrella contract for HUC and topside maintenance underscores its proactive approach to capitalising on market opportunities.

The group's marine division, PERDANA, is set to benefit from the booming offshore support vessel (OSV) market in Malaysia. With a fleet comprising eight Anchor Handling Tug Supply (AHTS) vessels and several accommodation work barges and boats, Dayang expects significant earnings growth driven by favourable daily charter rates (DCR) up to RM100,000.