DAYANG – Fundamental Analysis (26 May 2015)

DAYANG Analysis:-

Excel – http://1drv.ms/1FAy6iD

Notes – http://tinyurl.com/nm4z8lm

My View:-

  • Valuation:
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.215) – Fair value 3.31 (Fair Value Uncertainty: MEDIUM)
        • R4Q (EPS: 0.203) – Fair value 3.12 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (EPS: 0.205) – Fair value 3.16 (Fair Value Uncertainty: MEDIUM)
        • FY16 (EPS: 0.236) – Fair value 3.63 (Fair Value Uncertainty: LOW)
      • EPS applied to reach the current stock price (2.4): 0.156
  • I am positive on the current developments and progress of Dayang’s HUC projects. In addition, the company is venturing into the EPCC segment of the value chain. Given the company’s history and reputation of being a conservative and risk-averse company, the EPCC venture will bear fruit in the medium to long term.
  • As with the nature of business undertaken by DAYANG, the company is exposed to end-of-year monsoon season and shorter working days. As such, 4Q14 earnings were expected to be lower than that of the previous quarters.
  • 26 May 2015 – Order book currently stands at RM3.8b, expected to span until 2018.
  • FY15Q1 – QoQ was lower however due to less work orders received and performed. Albeit this, work orders did have a higher profit margin contribution QoQ, exemplifying Dayang’s progress in undertaking measures to minimise costs.
  • 26 May 2015 – PERDANA MGO – The Group has been taking initiatives to continue enhancing its bottom-line, bracing themselves for measures taken by oil majors in light of the oil price slide. We believe the Group’s intention to be a vessel owner would serve to enhance its bottom-line to better manage its costs for the future. Leveraging on Perdana’s assets, Dayang’s portfolio would be more capable in supporting its tenders in Engineering Procurement Construction and Commissioning (EPCC) activities and future deepwater tenders.
    • 14 May 2015 – Analysts are of the view that Dayang will be better positioned to win bigger jobs with the likely takeover of Perdana.
      • The control of Perdana would give Dayang better access to Perdana’s young fleet of 19 vessels, of which 17 are in operation and two are due for delivery in financial year 2016
      • Perdana is likely to be the least exposed offshore support vessel player to renegotiation of rates by Petronas as it is already providing relatively low rates compared to its peers given contracts were won pre-rebound cycle.
  • I will continue to hold and accumulate DAYANG.

Latest Financial – Q1 2015 Financial Report (25 May 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4749133

At the time of writing, I owned shares of DAYANG.

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