Hot Stock Daya rises 7.7% after charter contract win

by **Cals** Thu 17 Oct 2013, 13:24

Hot Stock Daya rises 7.7% after charter contract win

Business & Markets 2013

Written by Jeffrey Tan of theedgemalaysia.com

Thursday, 17 October 2013 13:03

KUALA LUMPUR (Oct 17): Daya Materials Bhd saw its share rise as much as 7.7% today after it announced yesterday that it had won a charter contract with Swiss-based Allseas UK Ltd for an estimated value of between RM7.8 million to RM11.8 million.

At midday break today, Daya was trading higher at 34 sen, up 1.5 sen or 4.6%, on trades of 43.841 million shares. It was the second most active counter.

In a note today, Public IB Bhd research analyst Nuraida Mohd Ali said the success of the charter further strengthens Daya's position as a prominent provider globally.

“We maintain our earnings estimates for now as we had factored in this contract into our valuation earlier,” said Nuraida.

“Hence, we reiterate our ‘outperform’ call on Daya with unchanged target price (TP) of 37 sen. Our TP is pegged to a price earnings ratio multiple of 12 times FY14 earnings per share of 3.1 sen.”

Based on the contract value, she gathered Daya is currently locking-in charter rates approximately 15% higher than the long term one of US$105,000 (RM331,853) per day.

She added that it is standard practice in the market to see increases by 10% to 20% from average market rates.

“We are anticipating the same figure for the two vessels Siem Daya 1 and Siem Daya 2,” she said.

Nuraida added that the outlook on Daya remained bullish, with order book worth about RM2.1 billion, which will provide the group earnings visibility up to FY17.

In addition, Nuraida said she sees a re-rating potential should it secure higher margins on the chartering business.

Meanwhile, M & A Securities Sdn Bhd and HwangDBS Vickers Research in their respective notes said that Daya is a stock to watch today.

M & A Securities said it gave a target price of 32 sen for the integrated oil and gas player.