This document provides a financial analysis of DAYANG for the 2014 financial year. It summarizes DAYANG's business activities in offshore topside maintenance services, marine charters, and equipment hire for the oil and gas industry. The analysis finds that DAYANG has strong profitability and scale, wide economic moats, and a healthy financial position. Key growth drivers include aging offshore infrastructure in Malaysia driving demand for maintenance contracts. Risks include downturns in the oil and gas sector and difficulties executing international expansion.

1. DAYANG
FUNDAMENTAL ANALYSIS
Financial Year 2014 (31 Dec 2014)
L. C. Chong
2 December 2015

2. DISCLAIMER
I am NOT an investment advisor nor a financial advisor, and no information provided
here is to be interpreted as a suggestion to buy or sell securities.
Stock analysis in this presentation may not neutral because I have incorporated my
risk appetite and principles in the analysis.
All figures in MYR and in '000s, except per share data
2

3. DECLARATION OF INTEREST
• At the time of writing, I owned shares of DAYANG.

4. KEEP IN TOUCH
http://lcchong.wordpress.com
https://goo.gl/jjkq4P

5. SCOPE
• Figures and ratios are based on the figures reported in Annual Report or the latest
Q4 Quarterly Report (QR)
• Unless there is a need, this analysis will not include financial figures reported in Q1,
Q2 and Q3
• I will provide QR result highlights in my blog
• Valuation is not covered in this analysis
• I will provide valuation in my blog.

6. CHANGES
• 20 Nov 2015 – First write up of DAYANG in PowerPoint format

7. BUSINESS PROFILE
• Offshore topside maintenance services, minor fabrication works and offshore hook-
up and commissioning services for oil and gas industry

8. BUSINESS PROFILE (CONT.)
Topside maintenance services
• Provision of offshore topside maintenance services, minor fabrication works and offshore hook-up and
commissioning services for oil and gas industry.
Marine charter
• Chartering of marine vessels and provision of related support services
Equipment hire
• Equipment hire operation

9. TOPSIDE MAJOR MAINTENANCE
(TMM)
• TMM is like a car being serviced at intervals
• Regular maintenances or upgrading works focus on substructures in the main deck,
helideck, pipes, valves, electrical and instrumentations
• As the life of the platform ages, the level of activities increases as well
• Regular maintenances or upgrading works are required to maximise oil recovery
and production from existing and new platforms.

10. TOPSIDE MAJOR MAINTENANCE
(TMM) (CONT.)

11. HOOK UP, CONSTRUCTION AND
COMMISSIONING (HUCC)
• HUCC is like a contractor supplying construction services
• It involves the provision of interconnection and interfacing of systems such as
structures, modules, equipment and commissioning of systems for offshore
platforms
• The contract awarded by client can range from 1 to 5 years and multiple work
orders can be given within that period
• The value of the job order may be different from the initial estimated value as work
orders are based on “call up” basis with no guarantee on value or timing.

12. HOOK UP, CONSTRUCTION AND
COMMISSIONING (HUCC) (CONT.)

13. OWNERSHIP SUMMARY
INSTITUTIONS
36%
CORPORATIONS (PUBLIC)
29%
INDIVIDUALS/INSIDERS
29%
PUBLIC AND OTHER
6%
Position Date: 6 Nov 2015

14. TOP 5 SHAREHOLDERS
NAIM HOLDINGS BERHAD
41%
SUK KIONG LING
22%
KUMPULAN WANG
PERSARAAN
13%
LEMBAGA TABUNG HAJI
13%
YUSOF BIN TENGKU AHMAD
SHAHRUDDIN
11%
Position Date: 6 Nov 2015

15. OWNERSHIP ANALYSIS
• The group’s largest shareholder is NAIM HOLDINGS BERHAD, with a 29% stake in
the group
• Following large shareholder is Suk Kiong Ling, with a stake of 15.8%
• Institutional funds, such as Kumpulan Wang Persaraan and Lembaga Tabung Haji,
owned 36% of DAYANG.

16. ECONOMIC MOATS
• Cost Advantage
• EBIT margin ranged from 26% to 33% in the past 5 years
• This can be rated as Baa
• Switching Costs
• Contracts in O&G sector usually are for long term. Thus, it is unlikely upstream
companies simply switch contractors or suppliers
• Network Effect
• Increasing O&G projects will increase revenue of DAYANG
• Poor oil prices will make upstream companies to cut down their E&P activities.

17. ECONOMIC MOATS (CONT.)
• Intangible Assets
• Technical knowledge
• Strong link with local E&P companies
• Efficient Scale
• Oligopoly market as controlled by Petronas and Malaysia government

18. ECONOMIC MOATS (CONT.)
16.5%
21.3%
22.5%
18.3%
20.7%
9.4%
16.0%
13.7%
6.1% 6.3%
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
ROIC and CROIC
Avg. Invested Capital Avg. Capex ROIC % CROIC %

19. ECONOMIC MOATS (CONT.)
• ROIC of DAYANG increased from 16.5% (FY10) to 20.7% (FY14)
• ROIC increased even if invested capital increased from 388,856 (FY10) to 833,532 (FY14)
• DAYANG has been enjoying wide economic moats
• CROIC declined from 16% (FY11) to 6.3% (FY14)
• FCFF declined from 60,328 (FY11) to 45,045 (FY14) due to increasing of net capex (FY11:
46,365; FY14: 118,592)
• Invested capital increased from 388,856 (FY10) to 833,532 (FY14).

20. SCALE
103,485
127,381
151,739
204,262
266,212
0
50,000
100,000
150,000
200,000
250,000
300,000
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
EBITDA

21. SCALE (CONT.)
547,086
690,644
738,419
988,114
1,316,682
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
Total Assets

22. SCALE (CONT.)
• EBITDA increased from 103,485 (FY10) to 266,212 (FY14)
• Total Assets increased from 547,086 (FY10) to 1,316,682 (FY14)
• Larger scale can be an indicator for a company’s ability to withstand industry cycles
and competitive forces
• Strong ability to obtain financing to undertake major capital projects.

23. PROFITABILITY
34.9%
29.2%
33.0% 32.4%
25.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
EBIT Margin %

24. PROFITABILITY (CONT.)
• EBIT captures the impact of depreciation on the fixed asset base and the need to
invest in a company’s equipment
• EBIT margin of DAYANG is slightly volatile, but it is in downtrend
• EBIT margin was 25.6% in FY14, which can rated as Baa.

25. PROFITABILITY (CONT.)
16.3%
16.2%
17.9%
18.1%
17.1%
15.0%
15.5%
16.0%
16.5%
17.0%
17.5%
18.0%
18.5%
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
EBIT/Assets

26. PROFITABILITY (CONT.)
• To measure capital efficiency and return on investment, the ratio of EBIT to total
assets is used
• A higher efficiency ratio indicates an improved ability to maintain investment levels in an
oilfield services company’s fleet and equipment which often is an important
differentiating factor for customers
• EBIT to total assets was 17.1% in FY14, which can rated as A.

27. PROFITABILITY (CONT.)
2011 2012 2013 2014 2015
Marine charter 17,208,342 40,853,424 17,511,862 17,511,862 16,474,695
Topside maintenance services 364,341,213 360,362,057 535,122,410 535,122,410 860,395,047
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
1,000,000,000
Revenue by Operating Segment

28. PROFITABILITY (CONT.)
• Malaysian operations championing growth – Full year FY15 operating profit for the
Malaysian operations rose by +44.5%yoy to RM279.6m
• International operations remain challenging – Revenue from the international
segment declined by -19.1%yoy due to lower activity levels
• Low activity levels were recorded for the engineering, construction and plant
maintenance in Singapore, fabrication in Australia and New Zealand and sales of
specialist products and services.

29. LEVERAGE & COVERAGE
1.07 x
0.64 x
0.44 x
0.60 x 0.58 x
0.00 x
0.20 x
0.40 x
0.60 x
0.80 x
1.00 x
1.20 x
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
Debt / EBITDA

30. LEVERAGE & COVERAGE (CONT.)
17.11 x
24.56 x
37.92 x
55.03 x
37.02 x
0.00 x
10.00 x
20.00 x
30.00 x
40.00 x
50.00 x
60.00 x
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
EBITDA/Interest

31. LEVERAGE & COVERAGE (CONT.)
• DAYANG’s financial leverage are healthy
• Debt/EBITDA – 0.58x (FY14) (Aa)
• EBITDA/Interest – 37x (FY14) (Aaa).

32. ORDER BOOK
• 26 May 2015 – Order book currently stands at RM3.8b at June 2015, expected to
span until 2018
Source: RHB 18 Mar 2015

33. GROWTH DRIVERS
• 4 Jun 2015 – DAYANG has been awarded a two-year contract for the Provision of
Facilities Improvement Project (FIP) by Petronas Carigali Sdn Bhd worth
approximately RM250 million
• 14 May 2015 – Analysts are of the view that Dayang will be better positioned to win
bigger jobs with the likely takeover of Perdana
• The control of Perdana would give Dayang better access to Perdana’s young fleet of 19
vessels, of which 17 are in operation and two are due for delivery in financial year 2016
• 15 Dec 2014 - Dayang has won a RM280 million contract for the provision of major
modification works for the Baram Delta Gas Gathering Project 2 (Bardegg-2) and
Baronia enhanced oil recovery (EOR) development project just off the shore of
Sarawak.

34. GROWTH DRIVERS (CONT.)
• 16 Dec 2014 – The next stage of growth
• The company is already preparing itself for the next stage of growth into the EPCC
segment of the oil and gas industry
• Dayang had already invested RM15m to purchase a new fabrication yard in Labuan and
is planning to invest another RM20-30m in capex for fabrication yard equipments
• Dayang has hired several fabrication designers and engineers in preparation for such
jobs.

35. GROWTH DRIVERS (CONT.)
• 6 May 2013 – Dayang has secured the provision of Hook-up, Commissioning and
Topside Major Services jobs in May 2013 from Murphy Sarawak Oil Co. Ltd worth
RM313.6 million
• 1 Oct 2014 – The current Pan Malaysia hook-up and commissioning projects with
Petronas Carigali, Shell Malaysia, Murphy and Nippon are progressing very well
(evident from 2Q14 results)
• There are currently seven vessels (five work barges and two work boats) mobilised for
the Shell HUC since March 2014
• The company is expecting the high activity level to sustain into 2015.

36. GROWTH DRIVERS (CONT.)
Source: iCapital

37. GROWTH DRIVERS (CONT.)
• Many of the offshore platforms in Malaysia are over 20 years of age and urgently
needs upgrading
• These HUCC and topside maintenance contracts are normally recurring every 5 years
• Given Dayang’s strong track record and execution abilities, Dayang potentially will
continue be a winner and is emerging as a power house offshore HUCC player in a
region of aging O&G infrastructures
• Margin expansion from new HUCC/TM work orders.

38. ISSUES/RISKS/CHALLENGES
• A downturn in the oil & gas sector that could result in delays in contract rollouts
• Political risk and Execution risk
• Unsure of international growth prospects
• Difficulties in sourcing O&G engineering talent
• Unable to charter suitable and/or sufficient vessels to cater for its massive
TMM/HUC projects
• Insufficient capacity to secure more attractive projects.

39. ISSUES/RISKS/CHALLENGES (CONT.)
• Lower margins and potentially lower-than-expected mobilisation from some of the
Pan-Malaysian HUC players
• 18 Mar 2015 – HUCC contracts are proceeding normally although it is
experiencing slow work orders. Maintenance work orders are likely to pick up again
due to the need to maintain safety and production efficiency standards.

40. SEASONALITY
• 4 Dec 2014 – The group caters exclusively to the offshore brownfield market. This
segment is resilient to volatility in crude oil prices because it relates to the upkeep
of existing production facilities.

41. SHAREHOLDER RETURN
Time Frame Date Bought at Original
Value
Dividend
Received
Unrealized
Gain/Loss
Current
Return
CAGR %
3-Y 30 Nov
2012
1.5 1,500 257.50 675.00 2,433 17.5%
5-Y 1 Dec 2010 1.246 1,246 571.88 1,472.75 3,291 21%
7-Y 1 Dec 2008 0.361 361 741.88 2,357.75 3,461 38%
Assumptions:
1. Commission paid is ignored in this simulation
2. The current price is 1.45 (as of the time of writing)
3. Unit purchased is 1,000.

42. SHAREHOLDER RETURN (CONT.)
0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
0.1200
0.1400
2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31
DPS

43. GOING FORWARD
• DAYANG has good reputation of being a conservative and risk-averse company
• 26 May 2015 – Order book currently stands at RM3.8b at June 2015, expected to
span until 2018
• I will continue to hold and accumulate this stock.