Dayang Enterprise Holdings Bhd (DEHB) is anticipated to see robust performance in 2Q24, buoyed by the impressive results from its subsidiary, Perdana Petroleum (PETR). PETR, in which DEHB holds a 64% stake. The unit reported its highest earnings for 2Q24, with revenue increasing by 26% sequentially, driven by heightened vessel utilisation. The vessel utilisation rate surged to 89%, its highest since 3Q19, significantly boosting PETR’s EBIT margin by 17 percentage points to 38%.
Analyst at CGS reiterate an ADD recommendation for the oil and gas industry company with an unchanged target price (TP) of RM4.00.
PETR’s 2Q24 normalised net profit more than doubled, reaching RM33.8 million, up from RM16.5 million in 1Q24. This robust performance, along with a 53% year-on-year revenue increase, is expected to positively influence DEHB’s earnings outlook. The strong results from PETR are seen as a positive indicator for DEHB, suggesting potential upside surprises in its 2024 earnings.
Despite the company’s share price having risen 84% over the past year, significantly outperforming the KLCI and KL Energy Index, there is still anticipated upside potential. Current market valuations do not fully reflect DEHB’s strong earnings prospects, with the stock trading at a 37% discount to its 10-year mean P/E ratio. The expected return on invested capital (ROIC) for DEHB in FY24F is projected at 18.3%, compared to the market’s estimate of 15.8%.
The continued buoyancy in the offshore supply vessel (OSV) sector, coupled with new revenue streams from the Asset Integrity Findings (AIF) contract commencing in May 2024, is likely to drive the company’s earnings further. With forecasts of a 36% growth in net profit for 2024 and an additional 30% in 2025, DEHB remains a top pick in the Malaysian oil and gas sector.
