Excerpts from Maybank report

Dyna-Mac Holdings (SGX: NO4)

• Dyna-Mac Holdings reported strong 1H23 revenue growth of 47% YoY to SGD182.3m and NPAT growth of 319% to SGD10.2m, with gross margins expanding to 13.5% from 10.1%, beating our and the street’s estimates, as it truly benefited from the upcycle.
• Management is pursuing a JTC lease for a plot of land along Gul Road which will potentially expand capacity by 30-40%.
• It is also exploring M&A opportunities and hopes to acquire similar industry businesses with recurring revenues. We remain confident of Dyna-Mac Holdings’s outlook and raise FY23/24E PATMI estimates by 12% and 8%.

Maintain BUY with a higher TP of SGD0.51, pegged to 20x FY24E P/E.

Stronger 2H23E – SGD542.7m order book

Gross margin also rose to 13.5% in 1H23 from 10.51% in 1H22 and we expect continue gains on better utilisation as well as improved pricing of contracts.

With utilisation now close to full, we believe this is a good sign for its financial performance in 2H23E. Traditionally, 2H has also always been stronger than 1H.

New land expected to expand capacity by 30-40%

Management is pursuing a JTC lease for a piece of land along Gul road for which it was granted a temporary occupation licence for the purpose of soil investigation.

This corresponds with the robust FPSO demand in the medium term. The new piece of land will provide additional fabrication capacity for current and future projects such as carbon capture and storage, and exotic piping for hydrogen/ammonia.

We expect yard capacity to grow by 30-40% by the end of 2023.

You can find the full report here and the company website here.