KUALA LUMPUR: Despite the challenging business environment, Dayang Enterprise Holdings Bhd is likely to see a better 2022 bolstered by improved profit margins and healthy order book.

       This follows the gradual relaxation on standard operating procedures (SOPs) post Covid-vaccinations.

       According to Public Invest Research post a meeting with Dayang’s management, ongoing discussion involving Petronas, the Health Ministry and the state government of Sarawak over the movement restrictions is likely to bear positive outcomes in the near term.

       “Therefore, the financial year 2022 ending Dec 31 (FY22) forecast earnings are anticipated to be robust, supported by a healthy order book of RM2.3bil and improved profit margins,” it said in an update on the oil and gas services group.

       The research firm believes increase in the availability of work orders will continue with higher capital expenditure spending by oil majors.

       It noted that Petronas’ second quarter capital expenditure was disappointing mainly due to project delays caused by movement restrictions.

       Going by this, it foresees the overall performance for this year to be affected from the possibility of low levels of productivity given the still-high Covid-19 infections.

       Dayang posted a net loss of RM21.89mil for the second quarter ended June 30 (Q2’21).

       The research house said the results came in below its consensus estimates.

       “Considering the Q2’21 performance, we are of the view that the overall performance for FY21 will be unexciting.

       “This is mainly because efficiency levels are expected to remain low given the difficulties in project execution due to a lower manpower capacity and tighter SOPs set by the Health Ministry, specifically on workers’ movement.

       This year, crews at offshore sites are not allowed to transfer directly to other platforms to perform other jobs, without a 14-day onshore quarantine, it noted.

       As such, Public Invest Research said the management guided that there will be deferment of certain work orders like the integrated hook-up and commissioning worth around RM80mil, to next year.