Possible tie-up to forge brighter future for Dayang
Posted on October 6, 2011, ThursdayKUCHING: Dayang Enterprise Holdings Bhd’s (Dayang) future appears to be bright as reports of a possible acquisition of Perdana Petroleum Bhd’s (Perdana Petroleum) shares surfaced over the weekend, indicating a possibly lucrative future business expansion plan.
OSK Research Sdn Bhd (OSK Research) stated in its research report that mergers and acquisitions for Dayang had been within its expectations.
“We had previously highlighted in our reports that Dayang was cash-rich, with net cash of RM131.9 million as at June 2011, signifying a healthy and stable recurring income business for the company.
“Companies which are a potential fit for Dayang would include those with exposure in marginal oilfield services or provide vessel support, or own a fabrication or repair and maintenance yard,” it added, seeing a synergistic fit in the tie-up between Dayang Enterprise and Perdana Petroleum.
While the tie-up might see some duplication of assets, the research house informed that Dayang’s four work boats were fully utilised while Perdana Petroleum was experiencing a low utilisation rate on its four work barges and three work boats as a result of its core expertise being in deepwater offshore supply vessels.
“We understand that most of Perdana Petroleum’s work barges and work boats are attached to short-term contracts that are expiring soon,” said OSK Research, indicating that the said barges would come in handy for Dayang to deploy to its brownfield business should the tie-up materialise.
The already-bright outlook on the tie-up would be energised by Dayang’s exposure to Perdana Petroleum’s Anchor Handling Tug Supply fleet, which could speed up its potential involvement in marginal oilfields in the future.
The research house also shed light on the uncertainties facing the tie-up. While Perdana Petroleum’s share trading price was attractive compared with its peers, an agreement had yet to be reached as uncertainties arose with regards to the amount Dayang was willing to fork out for Perdana Petroleum’s shares.
“Perdana Petroleum’s existing shareholders’ willingness to sell the bulk of their shares were also in debate as any potential acquisition would involve a strategic stake,” added OSK Research, pointing out Perdana Petroleum’s market capilisation at about RM2.77 million based on Monday’s closing price of RM0.615.
Despite uncertainties surrounding the tie-up, OSK Research maintained an unchanged fair value of RM2.70 per share on Dayang as the company’s robust order book of RM1.5 billion would be sufficient to ‘keep it busy over the next two to three years, and hence qualify it as a defensive oil and gas pick’.