KUALA LUMPUR: Hwang DBS Vickers Research believes Dayang is among the frontrunners to clinch some major oil & gas maintenance jobs to be awarded this year
The research house said on Thursday, April 1 that several major maintenance jobs are expected to come on-stream this year.
“We believe Dayang has a strong chance of securing some of these contracts, and to date has participated in several, notably the RM400 million SSB/SSPC contract,” it said.
Other contracts up for grab include Petronas Cargill’s RM1.5b 5-year maintenance work and RM400m ExxonMobil contract. Dayang is the incumbent in some of these recurrent jobs and OSK Research believes its track record would stand the company in good stead as potential beneficiaries.
“We expect earnings growth to be supported by active order book replenishment and maiden contribution from Borcos. We have assumed contract wins of RM500m for FY10. Dayang current work orders of RM520 million would keep the company busy till 2012, while Borcos has 80% of its vessels locked under long term charter contracts (1-3 years),” it said.
Dayang is a good proxy to East Malaysia oil & gas play given its track record and growth story.
“We initiate coverage with a Buy call and 12-month target price of RM2.60/share, pegged to 11x FY11F EPS. Dayang offers decent FY11F net yield of 2.7%, as well as superior margin (FY09 EBIT of 25.8%) relative to the sector (19.4%). The stock is currently trading at FY11F PE and PBV of 8.0x and 1.6x, respectively,” it said.