Brokers’ take: Maybank raises Dyna-Mac target price to S$0.40 on strong Q1 results
Bryan Kow
MAYBANK Securities raised its target price for Dyna-Mac to S$0.40, from S$0.35 previously, after the group reported on Tuesday (May 9) strong results for the first quarter ended Mar 31, 2023.
The group, which engineers and commissions topside modules in the oil and gas industry, recorded a net profit of S$3.9 million, more than double the S$1.9 million from the year before.
The brokerage has maintained a “buy” call for the counter and revised its forecasts for Dyna-Mac’s FY2023 and FY2024 net profit after tax upwards by 4 per cent and 2.7 per cent, respectively.
Analyst Jarick Seet noted on Wednesday that Q1 is usually the group’s weakest quarter due to operational disruptions caused by holidays such as the Chinese New Year.
“We expect better quarters ahead for Dyna-Mac and remain confident in the management’s execution ability,” he added.
Dyna-Mac’s gross margins rose to 13.3 per cent for the quarter. Maybank anticipates that the group’s margins will continue to rise due to better utilisation and pricing of contracts.
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With a revival of the oil and gas sector, along with the group’s net cash position of S$122.3 million, a mergers and acquisitions (M&A) could be accretive and beneficial for shareholders, said Seet.
He added that additional recurring revenue from an M&A would provide stability for Dyna-Mac’s earnings, which are currently almost entirely based on its order book.
As at Mar 31, the group’s net order book stood at S$338.1 million.
Maybank maintains a bullish long-term outlook for Dyna-Mac as it believes the group is one of the key beneficiaries of the multi-year upcycle in the oil and gas sector.
Shares of Dyna-Mac were trading up S$0.035 or 12.5 per cent at S$0.315 as at 1.59 pm on Wednesday.
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