Dayang Enterprise holdings bhd
Initiating with a Buy, TP: RM2.20, Now RM1.56
Even with the recent 20.6% increase, we view that Dayang still holds
value and trading at 8.4x on FY10 EPS is mighty reasonable. Before
moving forward, we do first highlight key risks of the company which are:-
(1) margin squeeze in their maintenance work could increase,
(2)oversupply in the vessel market could see Borcos’s utilisation decline, and
(3) over-dependence on Petronas could result in choppy earnings. With
that out of the way, we view that pegging them to a 12x PE is fair for now
and also on par with industry valuations. This derives a target price of
RM2.20. To note, Dayang also typically pays out commendable dividends