Dayang Enterprise Holdings Berhad (Dayang) has been appointed by Petronas Carigali as one of the panel contractors for offshore support vessel (OSV) services over the next three years. This appointment is a significant boost for Dayang, offering potential benefits from higher charter rates and increased vessel utilisation. According to analysts, this development is expected to positively impact Dayang's financial performance. The company, which operates seven OSV vessels, including five maintenance work vessels and two supply boats, stands to gain from enhanced charter opportunities.
Analysts have maintained their earnings forecasts for Dayang, factoring in an anticipated 80% vessel utilisation rate and a 13% increase in charter rates for FY24 and FY25. The target price remains at RM3.31 with an OUTPERFORM call.
The new panel contractor status positions Dayang favourably for securing charters from Petronas Carigali, potentially improving revenue from offshore maintenance works. The vessels are projected to command daily charter rates (DCR) between RM10,000 and RM15,000, significantly higher than the FY23 rates of RM8,000 to RM11,000. Although inclusion on the panel does not guarantee specific contracts, the anticipated uptick in offshore maintenance activities is expected to drive Dayang's vessel utilisation to align with the analysts' 80% forecast.
The positive outlook is supported by a robust forecast and valuation. Analysts have maintained a target price of RM3.31, based on a 13x FY25 PER, reflecting Dayang's prominent position in the market and its larger market capitalisation compared to peers. The valuation includes a premium over the average forward P/E ratio of 12x observed in the 2014 up-cycle, highlighting Dayang's strong market presence.
Dayang's investment case is bolstered by several factors: the expected increase in upstream maintenance activities, improved project margins from better contract terms, a net cash balance sheet that supports expansion potential, and benefits from the local OSV market's supply crunch. Analysts continue to favour Dayang for its strategic positioning and market leadership in the topside maintenance sector.
