KUALA LUMPUR (May 7): Oil and gas services firm Dayang Enterprise Holdings Bhd will post a strong rebound in its first quarter (1Q) results and earnings may pick up in the coming quarters on seasonally stronger work orders and utilisation, said Phillip Capital.

Dayang is likely to post a net profit of RM20 million to RM30 million for January-March quarter compared to loss over the same quarter a year earlier, Phillip Capital said in an earnings preview note. The tight vessel market should further support the high daily charter rates (DCR), benefitting Dayang, it noted.

“The stronger earnings delivery in the coming few quarters, and potential sizeable contract wins in the horizon is expected to further re-rate share price,” Phillip Capital said. The research house maintained its "buy" recommendations.

Dayang has until the end of May to announce its 1Q results. 

Shares of Dayang have already risen 61% so far this year amid optimism that elevated oil prices will further boost demand for its services, and analysts broadly think there is more upside to the company valued at close to RM3 billion on Bursa Malaysia.

A majority of six out of seven analysts covering Dayang have "buy" calls on the stock and only one "sell" rating. The consensus’ 12-month target price is RM3.02, suggesting a further 17% return potential from current prices.

Dayang is eyeing more work boats and accommodation work barges in anticipation of increasing work orders from the Petronas’ asset integrity findings (AIF) project, which is expected to run at full capacity by the third quarter of this year, Phillip Capital flagged.

The AIF project could potentially provide Dayang with an additional annual revenue of between RM250 million and RM350 million based on existing assumptions, the house said.

Overall, Phillip Capital estimates Dayang to make a net profit of RM233.6 million for this year, a tad above the Bloomberg consensus forecast of RM227 million. Revenue meanwhile will likely come in at RM1.23 billion, below the street’s expectations for RM1.38 billion.

“We remain positive on Dayang’s earnings prospects,” supported by higher domestic activities and daily charter rates, Phillip Capital added.