DAYANG – Fundamental Analysis (2 Dec 2015)

Fundamental Analysis as of FY14 – http://www.slideshare.net/lcchong76/dayang-fundamental-analysis-fy14

Excel – http://1drv.ms/1LMUyEI

Latest Financial – Q3 2015 Financial Report (27 Nov 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4934241

FY15 Q3 Results Highlight:

  • Dayang’s 3Q15 reported earnings rose +48.2%qoq to RM86m because +RM82m fair value gain for the acquisition of Perdana Petroleum.
  • However, if excluding this one time gain, its cumulative normalised 9M15 earnings dropped to RM3.8m (9M14: RM58m). Dayang’s dismal results were caused by losses incurred by Perdana during 3Q15 amounting to -RM23.4m. Perdana Petroleum contributed a loss of approximately RM23.4m in this quarter due to lower vessel utilisation rate (as average vessel utilisation rate fell further from 68% to 55% QoQ) and forex losses.
  • Inclusive of jobs from Perdana Petroleum, Dayang has a total orderbook of RM4.1b with a burn-rate until 2018. Its tenderbook stands at approximately RM650m.

Valuation:

  • Absolute EY%:
    • Trailing:
      • FY14 (EPS: 0.215) – 3.639 (Uncertainty Risk: LOW)
      • R4Q (EPS: 0.119) – 2.022 (Uncertainty Risk: LOW)
    • Forward:
      • FY15 (EPS: 0.135 ± 5%) – From 2.179 to 2.408 (Uncertainty Risk: LOW)
      • FY16 (EPS: 0.171 ± 5%) – From 2.756 to 3.046 (Uncertainty Risk: LOW)
    • EPS applied to reach the current stock price (1.45): 0.086
  • In my opinion, fair value of DAYANG range from 2.2 to 2.7. Uncertainty risk of fair value is LOW.

Going Forward:

  • Despite the unfavourable short-term outlook for Perdana due to lower average utilisation, the acquisition is a strategic fit for both companies as Perdana’s fleet of vessels will be complementary to Dayang’s HUCC business. This will help Dayang to entrench its position for next round of HUC tender in 2018/2019.
  • 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.
  • I will continue to hold and accumulate DAYANG.

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

One thought on “DAYANG – Fundamental Analysis (2 Dec 2015)

  1. Nice write up but Dayang is trading at its lowest ever today @1.400. Any possibility that it will turn into a falling knife due to the current low oil prices?

    Like

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