Friday 29 Mar 2024
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KUALA LUMPUR (Jan 14): Oil & gas (O&G) offshore services provider Dayang Enterprise Holdings Bhd rose as much as 4.6% in morning trades as investors embarked on rotational play.

As at 11.30 am today, Dayang has gained 9 sen or 3.5% to RM2.68 after hitting a high of RM2.71 earlier. The stock saw trades of some 1.7 million shares.

“Investors may be trying to make a quick buck off intraday profits,” an O&G research analyst told theedgemarkets.com over the telephone.

He said Dayang’s fundamentals were intact given its recent diversification into the engineering, procurement, construction & commissioning (EPCC) works from its traditional hook-up and commissioning business.

The firm had in December last year secured an EPCC contract worth RM280 million for modification works on two Petroliam Nasional Bhd (Petronas) platforms.

Another O&G analyst at a local bank-backed research firm concurred, saying Dayang’s fundamentals are intact in the longer term when crude oil prices climb higher, although it might be negatively impacted in the short term.

She said the firm’s earnings might suffer “some impact” in the next two to three quarters following Petronas’ decision to cut operational expenditure by up to 30%.

“Petronas’ slow contract roll-out and exposure to on-call basis contracts may hurt Dayang’s earnings,” she said over the telephone.

Meanwhile, Macquarie Research has an “outperform” rating on Dayang Enterprise Holdings Bhd at RM2.91 with a target price of RM4.25 on the basis that maintenance of existing production assets was critical.

It noted Dayang's RM4.2 billion orderbook was until 2018.

“As Petronas delays the development of new fields, the reliance on existing fields to produce becomes more crucial.

“We believe Dayang’s contracts are unlikely to be cancelled or delayed as Petronas cannot afford any unscheduled shutdown in its existing production assets,” it said in a report Jan 13

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