KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research is mildly positive over Dayang Enterprise Holdings Bhd's recent extension of its contract for the provision of maintenance, construction and modification (MCM) works from JX Nippon.

       In an announcement yesterday, Dayang said the contract extension is for about 17.5 months, and HLIB estimates is valued at about RM22mil.

       "Based on our channel checks, we think that Dayang successfully negotiated for significantly higher rates (by approximately 25% y-o-y) for its topside maintenance services for most of its contract renewals and extensions, albeit this one excluded," said HLIB.

       The research firm, which maintained its "hold" call on Dayang, said the contract extension falls under its job win assumptions for the year.

       It kept its target price at RM1.43 a share based on a 14x multiple on FY24 projected profits.

       The research firm expects a decent showing for Dayang in 2023 as recent ground checks indicated improved job orders from oil major amid elevated oil prices as well as improved job contract value across its value chain for its MCM and i-HUC works.

       It also noted improved projected blended vessel utilisation rates and DCRs for 63.7%-owned Perdana Petroleum in FY23.

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       To the downside however, it said the group may not register earnings growth this year because of significant project delays from a major client in 1Q23.

       It added that the Safina Project Phase 2 tender has been delayed from mid-2023 to end-2023.