Dayang Enterprise Holdings Bhd (Dayang) is expected to secure contracts from Petronas Carigali Sdn Bhd (Petronas Carigali) given its long-standing track record as well as ownership of a fleet of workboats that are assets required for the job.

According to HwangDBS Research Vickers Sdn Bhd (HwangDBS Research), Petronas Carigali was expected to call a tender for its offshore topside maintenance services in the next few months.

Early estimates put the contract values for both the Peninsular (PMO) as well as Sabah and Sarawak operations at cumulative RM1.2 billion. Dayang was currently the incumbent for the Sabah and Sarawak projects while Vastalux held the PMO operations.

Typically, a maintenance contract value tended to be higher than the original award as additional works apart from those stipulated might need to be carried out. Similarly, the eventual value of SSB/SSPC contract could be higher than the RM400 million secured, or 1.25 times of the original value as a rule of thumb, translating into cumulative RM500m (FY10F contract wins assumption).

Meanwhile, the research firm understood that Borcos might make a provision for previous years' taxation owing from vessels' charter income. However, this was pending discussion with the auditors.

It estimated a potential downside of six per cent in earnings could be made up by stronger contribution from Dayang's oil and gas operations.

Based on the 2010 outlook, HwangDBS pegged its target price at a fair value of RM2.60 per share, based on 11 times of financial year 2011 earnings per share.