Among the many local oil and gas players, Dayang Enterprise Holdings Bhd stands out for a number of reasons. Other than being one of the few O&G companies that is not linked to Petroliam Nasional Bhd (Petronas) but has a market capitalisation exceeding RM1 billion, Dayang has also made its mark for its strong return to shareholders.
The company’s total returns over the past three years — 2016 to 2019 — amounted to an impressive 25.7%, giving it the honour of being the winner in the energy category.
Dayang is mainly involved in the provision of maintenance services, fabrication operations, hook-up and commissioning and the charter of marine vessels, via its 63.05% publicly traded unit Perdana Petroleum Bhd.
Over the past three years, Dayang’s share price has gained more than 150%.
To recap, Brent Crude oil prices averaged US$110 per barrel between January 2011 and June 2014 before they began tapering off, hitting a low of US$29 per barrel in January 2016 and averaging US$44 per barrel that year. However, in 2019, Brent Crude averaged US$64 per barrel, which could explain the gains in Dayang’s share price.
While many O&G players are still reeling from the effects of the downturn in the sector, Dayang seems to have found its footing.
For its nine months ended Sept 30, 2020, the company reported a net profit of RM44.42 million on revenue of RM573.22 million. In the third quarter of FY2020, it bounced back from a loss in the second quarter of the year to register a net profit of RM36.08 million on revenue of RM230.21 million.
Nevertheless, while Dayang’s turnaround may be significant, the company has not been spared from the effects of the Covid-19 pandemic. For the first nine months of FY2019, Dayang raked in a net profit of RM158.05 million on turnover of RM761 million.
The improved numbers in 2019 were attributed to better vessel utilisation at 70% in contrast to 56% at present.
In the notes that accompany its financial statement, Dayang says it recorded a lower profit before tax for the nine months ended Sept 30, 2020, compared with the corresponding period a year ago as a result of higher operating costs incurred from the standard operating procedures to combat Covid-19, as well as a loss in foreign exchange of RM1.1 million.
On its prospects, the O&G stalwart says business activities picked up substantially in the third quarter of 2020, with the ramp-up in work orders coming from the maintenance, construction and modifications contract and topside maintenance services works under the Pan Malaysia hook-up and commissioning contract. Vessel utilisation came in stronger at 62%, compared with 52% in the second quarter and 55% in the first quarter, translating into an average utilisation rate of 56% for the first nine months of 2020.
“Barring any unforeseen circumstances, we are optimistic that the earnings trend will be sustainable, premised on our fairly sizeable order book at an estimated value of RM3.6 billion to last us at least until 2023 … Notwithstanding the volatility in oil price, we remain upbeat on the company’s future prospects,” says Dayang.
For the first nine months of the year, net cash generated from operating activities was RM280.72 million.
As at end-September, it had cash and cash equivalents of RM507.62 million and long- and short-term debt of RM675.68 million and RM114.26 million respectively. This translated into net debt of RM282.32 million. Its reserves stood at RM741.88 million.
Dayang’s finance costs for the nine-month period was RM35.2 million, lower that the RM48.92 million it reported in the previous corresponding period.
It is noteworthy that Dayang’s largest shareholder is Naim Holdings Bhd — a Sarawak-based property development, construction and civil engineering company, with a 26.42% stake in the O&G outfit. Nevertheless, the management of the company is handled by the Ling family (which has a 17.77% stake) and managing director Tengku Datuk Yusof Tengku Ahmad Shahruddin (5.9%).