Dayang bags RM1 billion Pan Malaysia MCM and HUC package
KUCHING (Nov 5): Dayang Enterprise Bhd (Dayang) has secured a maintenance, construction & modification (MCM) and Hook-up & Commissioning (HUC) package for Pan Malaysia from Shell that is estimated to be worth RM1 billion by industry analysts.
In a filing with Bursa Malaysia on Nov 4, Dayang said the contract is for Package Four and awarded by Sarawak Shell Bhd (SSB) and Sabah Shell Petroleum Company Ltd (SSPC) to its wholly-owned unit Dayang Enterprise Sdn Bhd.
The contract which is effective from October 14 spans a primary period of five years with optional three and two-year extensions.
According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), the contract was within expectations. While Dayang did not disclose a contract estimate, the single package is estimated at RM1 billion with a net margin of 20 per cent which is conservative compared to the company’s usual guidance.
“Based off these assumptions, we believe the contract could contribute approximately RM40 million to the group’s profit after tax (PAT) annually which would help keep the group’s margins resilient in FY25 along with its existing higher-margin orderbook,” it said.
“Additionally, Dayang will be able to see improved margins from the improving trends coming from its offshore support vessel (OSV) segment which is currently undergoing a boom.”
Besides this, it said Dayang could still potentially win more packages from Petroleum Nasional Bhd (Petronas) for the Pan Malaysia contract.
With a current order book valued at RM1.4 billion, Kenanga Research reckons that Dayang has more than sufficient runway to sustain its topside maintenance work orders in FY24 which will also mark the tail-end of the yearly extension of its previous umbrella topside maintenance and HUC contracts from Petronas and other clients.
“We believe that the next round of umbrella contracts could be awarded by the end of FY24, and if not, Dayang is likely to secure extensions for its maintenance works due to the expected high demand.”
-Agency
