RHB Investment Bank Bhd (RHB Research) and Hong Leong Investment Bank Bhd (HLIB) have both reiterated their BUY ratings on Dayang Enterprise Holdings Bhd, despite a disappointing first quarter of FY25. RHB Research lowered its target price to RM2.29 from RM2.74, while HLIB cut its target to RM2.67 from RM3.32, citing earnings misses and lower vessel utilisation.
However, both research houses maintained optimism over Dayang’s recovery prospects in the coming quarters, projecting a rebound in earnings supported by robust contract backlogs and seasonally stronger activity levels.
RHB Research noted that Dayang’s core net profit of RM9 million for 1Q25 came in below expectations, representing just 3% of both its and consensus full-year forecasts. This marked a sharp decline of 93% quarter-on-quarter and 76% year-on-year. The weak performance was attributed to reduced offshore topside maintenance services (TMS) work orders and a significant drop in vessel utilisation, which fell to 26% from 48% in the previous quarter.
The house also highlighted that Dayang’s 64%-owned Perdana Petroleum is likely to see improved vessel utilisation starting 2Q25, aided by a higher number of long-term contracts.
Similarly, HLIB reported core earnings of RM9.2 million, also well below expectations. The research firm explained that the earnings shortfall was due to a confluence of adverse factors, including Dayang’s transition from legacy maintenance and hook-up commissioning (MCM-HUC) contracts and extensive vessel maintenance ahead of long-term charter commitments.
HLIB expects earnings to recover substantially post-monsoon, driven by RM5.1 billion worth of outstanding call-out contracts and better unit rates from newly awarded jobs.
Both analysts have cut their earnings forecasts—RHB by as much as 35% for FY25 and HLIB by 25%—to reflect slower-than-expected offshore TMS activity and marine charter contributions. Nevertheless, both see the maintenance segment as relatively resilient, especially amid weaker oil prices, given its importance in ensuring production continuity and cash flow for operators.
They also noted that tight offshore supply vessel availability will likely keep charter rates firm, lending support to margins in the quarters ahead.
Dayang is conserving cash for its fleet renewal and rejuvenation programme, a move that analysts believe could position it well for medium-term demand. HLIB also underscored the stock’s attractive valuation, trading at just 8x FY25F earnings and offering an estimated dividend yield of 5.9%.
Despite the earnings miss, analysts are backing Dayang’s medium-term prospects, viewing the first quarter as transitory and maintaining that execution strength and vessel scarcity will underpin a stronger second half of the year.
