Dayang Enterprise waiting for the better

PETALING JAYA: HLIB Research has maintained its “buy” call on Dayang Enterprise Holdings Bhd, premised on a catalytic corporate exercise that is expected to generate high dividend yield from the distribution of dividend-in-specie; as well as the positive medium term outlook for the group on incoming contracts in the sector.

To recap, Dayang had proposed a distribution of up to 292.2 million ordinary shares or 37.5% equity stake in Perdana Petroleum Bhd by way of dividend-in-specie to the shareholders of Dayang.

The proposed dividend-in-specie in the form of Perdana shares was approved by shareholders in EGM held on Aug 9, 2017. Completion of the exercise has been postponed from its original target of early September 2017, as Bursa Malaysia is still determining the pricing of Perdana shares upon share distribution.

“Based on our valuation of 31 sen per share for Perdana, the yield would be at 13% based on the latest Dayang share price. We opine that the final value of Perdana share price would be significantly higher, due to its steep discount to the last traded price and improvement in vessel utilisation,” HLIB Research said.

Overall, the research house said 2018 will be a better year for Dayang group as hook-up and commissioning work orders are expected to pick up, backed by its RM3 billion orderbook.

Dayang was also recently awarded with a maintenance, construction & modification package A from Petronas Carigali on Sept 20, 2017, but the contract value was not announced as details of the work scope for the contract is dependent on the final work orders issued.

“Our channel checks and our back-of-the-envelope calculation shows the portion that Dayang had secured is in the excess of RM1 billion or higher, which represents a significant boost to its current orderbook of RM3 billion,” said HLIB.

HLIB’s target price for Dayang remains unchanged at RM1.20.