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Dayang: What caused the share and its OR to plunge?


Koon Yew Yin 26 Nov 2019

Yesterday Dayang share dropped 14 sen from Rm 2.07 to close at Rm 1.93, a drop of 6.8%. Dayang OR dropped 18 sen from Rm 1.13 to close at 95 sen, a drop of 16%.

Why should shareholders rush to sell Dayang OR when it dropped 16%?  That means there are a lot of forced selling because all the investment banks except CIMB , do not provide margin finance of 92 sen to convert 1 Dayang OR to Dayang share.

Many investors including me did not expect to see Dayang and Dayang OR to plunge so severely.  If fact, all the shareholders were expecting the share price to shot higher in view of the record profit of 11.1 sen per share for the 3rd quarter.

As soon as Mr Ooi Teik Bee saw Dayang’s announcement of 11.1 sen per share for the 3rd quarter, he immediately sent out his circular to all his subscribers with a target price of Rm 3.00.

Kenanga has upgraded from Rm 2.00 to Rm 2.35

Hong Leong Investment Bank’s target price is Rm 2.30

MIDF’s target price is Rm 2.69.

PBB has down-graded from Rm 2.00 to Rm 182

Dayang’s 1 quarter EPS -0.41 sen, 2nd quarter 5.71 sen and 3rd 11.1 sen. Assuming its 4th quarter EPS is the same as its 3rd quarter 11.1 sen, its annual EPS will be 27.5 sen. Just based on P/E 10, Dayanag’s price should be Rm 2.75. 

The reason for Dayang and Dayang OR to plunge is because of forced selling. When shareholders are forced to sell Dayang OR it would drag Dayang down. All these trading are puzzling and confusing to investors. 

Dayang’s long term growth prospect

As long there is oil, Petronas will continue to pump oil for sale. Even if the oil price dropped drastically, Petronas will still continue to pump because all the cost of the oil rigs has been paid and accounted for. Dayang being the largest oil rig maintenance contractor will have more contracts. Dayang should have very good profit growth prospect which is the most powerful catalyst to push the share price higher and higher.

In the last few months, I have been searching for any stock to diversify in vain. I cannot find another stock with similar profit growth prospect as Dayang. I seriously believe the share of Dayang will continue to go higher and higher as time goes by.

If you click this link below, you can read the Star’s recommendation of Dayang: https://www.thestar.com.my/business/business-news/2019/11/25/dayang-set-to-exceed-expectations-for-2019

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