- Dyna-Mac is involved in the design and construction of modules for the oil & gas industry. Its May 22 S$180m order win resulted in the company hitting a record high orderbook of S$641m, representing nearly three years of revenue based on its 2021 numbers.
- In 2021 and 1Q22, Dyna-Mac swung back to profitability after a large loss in 2020 as well as a change in management in that year. Importantly, Dyna-Mac’s ex-cash 2021 P/E of 7.1x is a 65% discount to its peer’s average of 20.4x.
New Management Guiding a Well-established Offshore Marine Contractor
- Dyna-Mac Holdings (SGX:NO4) is an offshore marine contractor with over 30 years of experience in the field given the successful delivery of > 300 modules. After the passing of its founder Lim Tze Jong in 4Q21, Dyna-Mac brought in new management in the form of CEO Lim Ah Cheng and CFO Jerald Lee (both ex-Keppel Offshore Marine – KOM) in 2020.
- We note that Dyna-Mac has a strategic partnership with Malaysia Marine and Heavy Engineering, China Merchants Group (CMG) and Baker Technology (SGX:BTP) to increase its ability to scale up its production when needed. Its CMG linkage also enables it to access relatively cheaper financing via its banking arm.
Historically High Orderbook
- On 4 May 22, Dyna-Mac reported an S$180m order for the construction of topside modules for an FPSO, bringing the company’s orderbook size to S$641m. This represents nearly three times its 2021 revenue.
- Dyna-Mac's management appears confident about increasing the size of its orderbook but also stated that it will be prudent and will take on work that it is confident of executing. It is firm in not veering away from its exposure to the oil & gas sector and expects more work in the carbon capture business.
Probable Divestment by Keppel Corporation
- Keppel Corp (SGX:BN4)’s Vision 2030 emphasised the divestment of KOM, however we note that the merger between KOM and Sembcorp Marine (SGX:S51) excludes Dyna-Mac. With 24.3%, Keppel Corp is the second-largest shareholder in Dyna-Mac after the late founder’s 41% stake.
- In the medium term, we expect Keppel Corp to sell its non-core stake in Dyna-Mac.
Source: UOB Kay Hian Research - 16 Jun 2022
