Dec 17, 2012

DAYANG – short term buy on dips recommendation

Dayang (stock code 5141) RM 2.47

DAYANG made a major weekly Wave 4 low of MYR1.41 (Sep 2011) with grossly oversold and bullish signals. Most of  its very firm buy indicators suggest an extremely strong upside move. It is likely break into higher territory, as it breached its key resistance areas recently.

SHORT-TERM BUY (TECHNICAL)  on dips for  DAYANG,  with firm support areas at MYR2.18 and MYR2.47. The upside target areas for the stock are at MYR2.60, MYR2.90 and MYR3.13, with stop-loss at MYR2.16.

below: Dayang Weekly Chart (click to enlarge)

dayang analysis


DAYANG’s share price made an obvious surge since its weekly Wave 4 low of RM1.41 on Sep 2011. Since that low, DAYANG’s chart has moved into daily, weekly and monthly up -trends to its recent all-time high of MYR2.50. As it broke below its recent key critical resistance of  MYR2.12 and  MYR2.25, look to buy DAYANG on any dips to its support areas as the moving averages depict very firm short-  to  longer-term up  trends for this stock.

In its 3Q12 results, DAYANG reported a 26% or MYR26m increase in revenue compared to the corresponding quarter last year.  Higher fleet  utilisation  and additional revenue from the charter of  its  new workboat Dayang Topaz contributed to increase in revenue. The group’s  PBT rose 35% (or MYR13.5m) compared to last year’s 3Q results due to the increase in marine charter business, which has a higher profit margin contribution, in the current quarter.

Moving forward, management remains optimistic of DAYANG’s future prospects for the remaining quarter of 2012 as the group has an existing order book  exceeding MYR1.2b,  which is expected to contribute earnings
until at least 2016. To sustain its growth momentum, the group is  looking to replenish  its  order book with new contracts. DAYANG is currently  bidding for  PAN Malaysia’s  hook-up commissioning (HUC) job  worth over
MYR10b. The group has  a high chance  of  securing the contract based on  its  established track record in the HUC segment.

dayang earning summary

Maybank-IB currently does not have fundamental coverage on DAYANG. A check of Bloomberg consensus data reveals that there are currently 8 research houses that have coverage on the stock , all of  which have BUY calls. DAYANG is currently trading at a forward PER of 13.2x and a high indicative dividend yield of 4.12%. The group also has a high ROE of 18.8%.

Dayang Enterprise Holdings Berhad (DAYANG), through its subsidiaries, provides offshore maintenance services. It also offers minor fabrication operations, offshore hook-ups, and the commissioning and chartering of marine vessels to the oil and gas industry.

by MIB