Maybank Securities has given its view on Singapore's Dyna-mac which has received a voluntary conditional cash offer from Hanwha Ocean SG Holdings. The offer is for all the issued and paid-up ordinary shares for SGD0.60 per share, conditional upon Hanwha having more than 50% of the total shareholding.
The house sees the offer as being fair but said it is on the lower end of the fair value range. Given this is not a final offer, it went on further to say it would be better for investors to wait for a revised offer that is either closer or higher than its TP of SGD0.64. The confidence apparently stems from the robust outlook for FPSOs, Dyna-mac's high net cash position, potential dividends and higher projected profitability in the next few years.
Outlook still positive but healthy order-book
Dyna-mac's order book has doubled to SGD896m in the past year and it has 50% more land so the house expects Dyna-Mac to execute its orderbook at a faster pace. Moreover, Maybank said the company has secured even higher margins than expected for the new projects. Gross margin actually surged to 27.6% in 1H24 from 13.5% in 1H23, which justifies the positive stance on the robust FPSO space accompanied by strong growth in revenue. Net orderbook remains at SGD681.3m, which is sufficient for FY24E as well as for FY25E.
Credit to management and the team
Dyna-mac has consistently outperformed our expectations in this upcycle and believes that credit has to go to management (AC Lim and his team) for the solid execution that enabled Dyna-mac to hit record levels of financial performance and order-book.
Aims to have controlling stake – may still be listed
Maybank thinks that the main aim of the offer is not to delist the company but to have a controlling stake of more than 50%. As a result, Dyna-mac may remain listed as the offer is only mandatory if more than 90% of the share float is acquired. The offer is also conditional on Hanwha acquiring more than 50% of the share float. Warrants must also be converted as there is
no offer for the warrants.
