Dayang Enterprise Holdings Bhd: A Golden Opportunity in a Volatile Energy Landscape

The energy services sector has been a rollercoaster in 2025, buffeted by geopolitical tensions, oil price swings, and shifting regulatory priorities. Amid this volatility, Dayang Enterprise Holdings Bhd (KLSE:DAYANG) has emerged as a standout play, leveraging recent contract wins, robust earnings momentum, and a compelling valuation to position itself as a rare buying opportunity. Let's dissect why this Malaysian offshore services giant deserves investor attention.

Contract Wins Fuel Long-Term Earnings Visibility

Dayang's recent deal pipeline is staggering. In late 2024 and early 2025, the company secured three major offshore topside maintenance contracts totaling RM4 billion from PETRONAS Carigali and Shell entities in Sarawak and Sabah. These contracts, covering maintenance, construction, and hook-up services, have a primary five-year term with options for two five-year extensions, ensuring revenue visibility through 2030. By mid-2025, these deals contributed to an RM5.1 billion order book, a 70% increase from 2024 levels.

The momentum continued into 2025:
- In March and April, Dayang's marine subsidiary secured 1,200+ days of vessel charters for accommodation workboats from PETRONAS, SEA Hibiscus, and Hibiscus Oil & Gas. These contracts alone are valued at over RM51 million, with extension options potentially tripling the duration.
- A May 2025 Landing Craft Tank (LCT) contract with PETRONAS Carigali added another 256 days of work, with options to extend to 316 days.

This relentless deal flow underscores Dayang's strategic dominance in Malaysia's offshore maintenance market. With 70% of its order book now secured through 2030, the company has built a fortress-like earnings base that insulates it from short-term oil price fluctuations.

Earnings Growth: A Strong Foundation with Near-Term Hurdles

Dayang's FY2024 results were a testament to its operational prowess. Revenue surged 32.9% YoY to RM1.47 billion, driven by:
- Topside maintenance division: RM941.8 million (+35% YoY), benefiting from rising demand for oilfield infrastructure upkeep.
- Marine segment: RM526.3 million (+29% YoY), fueled by a 68% vessel utilization rate and higher charter rates.

However, 1Q2025 profits fell 79.7% QoQ to RM9.2 million, a result of lower marine charter utilization (26% vs. 48% in 2024) and delayed work orders. Analysts at PublicInvest flagged execution risks, including client disputes and slower-than-expected contract ramp-ups.

But here's the critical point: these are near-term hiccups, not structural issues. The company's order book is now so robust that delayed work orders in early 2025 are likely temporary. As contracts like the RM4 billion topside maintenance deals begin full execution, utilization rates should rebound.

Valuation: A P/E Ratio at Multi-Year Lows

The market's pessimism is reflected in Dayang's valuation. As of June 2025, its trailing P/E ratio sits at 7.3x, near its five-year low. This compares favorably to:
- The Malaysian oil services sector average of 12x,
- Global peers like Technip Energies (16x) and Subsea 7 (15x).

Analysts at CIMB and Kenanga have noted this disconnect. Kenanga maintains an Outperform rating with a RM3.80 target, citing the potential for RM40 million annual profits from its RM1 billion contract pipeline. Even conservative estimates suggest the stock is undervalued by +30%.

Investment Thesis: Buy the Dip, Play the Long Game

Why buy Dayang now?
1. Contract certainty: Over 70% of its order book is secured through 2030, offering a predictable revenue stream.
2. Valuation upside: At 7.3x P/E, the stock offers a margin of safety even if near-term execution lags. A return to historical averages (10–12x) would unlock +40%+ gains.
3. Catalysts ahead:
- 2025 earnings ramp-up: Analysts project FY2025 net profit to rise +15% YoY, driven by higher vessel utilization and contract execution.
- Oil price stability: Brent crude's expected range of $65–$70/bbl in 2025 reduces the risk of client spending cuts.

Risks to consider:
- Geopolitical tensions (e.g., Middle East oil supply disruptions).
- Delays in work order execution, as flagged by PublicInvest.

Final Call: A Buy with a 12–18 Month Horizon

Dayang Enterprise is a classic value play in a cyclical sector. Its low P/E, fortress-like order book, and operational dominance in Malaysia's offshore market make it a compelling contrarian bet. Investors should target the RM1.80–RM2.00 range, with upside to RM2.80–RM3.00 within 18 months as contracts fire on all cylinders.

Action to take: Accumulate shares gradually at current levels, with a stop-loss below RM1.60. Pair this with a close watch on vessel utilization rates and new contract announcements—both are leading indicators of profitability.

In a sector where volatility is the norm, Dayang offers stability, growth, and a valuation that's too cheap to ignore. This could be one of the best energy plays of 2025.

Disclaimer: Always conduct your own research and consult a financial advisor before making investment decisions.