MAYBANK Securities has upped its price target on Dyna-Mac Holdings : NO4 0% to S$0.51 from S$0.40 while highlighting the mainboard-listed company as a key beneficiary of an oil and gas (O&G) industry upcycle that is expected to last until FY2026.

The new target price is pegged to a price-to-earnings ratio (P/E) of 20 times based on Maybank’s FY2024 estimates. The research house continues to rate the stock at “buy”.

In a report on Tuesday (Aug 8), analyst Jarick Seet raised his profit after taxes and minority interests (Patmi) estimates by 12 per cent and 8 per cent for FY2023 and FY2024, respectively. 

This comes after Dyna-Mac, which fabricates topside modules and structures for the offshore O&G industry, reported strong first-half financial results with revenue growth and improved gross margins. 

Seet said he maintains a bullish long-term outlook for the Singapore-based contractor, as he expects it to land larger contracts and expand its revenue and order book, which he describes as “already at a high”. 

The analyst expects an even stronger financial performance in the second half of the financial year, led by higher yard capacity and a strong balance sheet.  

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Dyna-Mac currently has two fabrication yards in Singapore at Gul Road and Pandan Crescent that take up a total land area of more than 140,000 square metres and have a combined annual capacity of 25,000 tonnes.

With Dyna-Mac expected to bag a lease for new land along Gul Road, Seet expects the group’s overall yard capacity to increase by 30 per cent to 40 per cent by the end of this year. 

He likes the company for its strong net cash balance, along with its management’s strategy to diversify its revenue streams while exploring potential merger and acquisition opportunities.

“We believe this direction will be positive for shareholders as it will add more certainty to earnings and cash flows, especially during downturns,” commented the analyst. 

Shares of Dyna-Mac were up S$0.02 or 4.9 per cent at S$0.43 as at the midday trading break on Thursday.