Kenanga Research says the deep loss incurred by Dayang in 1QFY21 is suggesting that recovery trajectory will be slow and gradual.
KUCHING (MAY 25) Analysts were not surprised that Dayang Enterprise Holdings Bhd (Dayang) saw a core net loss of RM34.5 million for its first quarter of financial year 2021 (1QFY21) as it deemed this to be broadly within expectations.
The team at Kenanga Investment Bank Bhd (Kenanga Research) said the core net loss figure was estimed after adjusting for unrealised forex losses) is deemed to be broadly within expectations against its full-year earnings forecasts of RM87.6 million and consensus of RM113 million, in anticipation of stronger periods ahead given that 1Q is seasonally the weakest quarter.
“Year on year (y-o-y) Dayang’s 1QFY21 plunged into loss, dragged by slower recognition of maintenance work orders amidst movement restrictions, while vessel utilisation was also lower at 20 per cent against 55 per cent last year,” it said.
“Quarter on quarter (q-o-q), the quarter similarly dipped into loss amidst slower maintenance work orders, while vessel utilisation deteriorated from 44 per cent last quarter to 20 per cent. However, take note that 1Q is typically the weakest quarter of the year for Dayang.”
Kenanga Research said the deep loss incurred in 1QFY21 is suggesting that recovery trajectory will be slow and gradual.
“Nonetheless, in tandem with the current rebound in crude oil prices, topside maintenance and offshore activities are expected to pick up in the coming quarters,” it said in more optimistic terms.
“Dayang’s current maintenance order-book of RM2.5 billion will also be sufficient to sustain revenue visibility for the next two to three years.
“Post results, we make no changes to our FY21-22 numbers. Our outperform call on Dayang with an unchanged target proce of RM1.80 per shapre is premised on the group’s potential for a gradual recovery, anticipating a return of job flows.”