Maybank Securities' Jarick Seet in his Oct 3 report has kept his 'buy' call and 51 cents target price on Dyna-Mac Holdings NO4 , following the topside module builder's announcement that it won additional contracts worth $88 million.
The company has thus built up an order book of $630.7 million and says it is receiving many enquiries from both existing and new customers.
In the meantime, the company enjoys clear revenue visibility into FY2025. "We expect Dyna-Mac to continue to benefit from this O&G upcycle and to continue to win more large orders as it has excess capacity to take on more work," says Seet.
The new contracts will be fulfilled using new yard space recently secured, without which, there will be a cap on how much work Dyna-Mac can take on.
As Seet recaps, the company has secured a JTC lease for a plot of land along Gul Road for which it was granted a temporary occupation licence for the purpose of soil investigation. This corresponds with "robust" demand for oil rigs in the medium term.
The new land plot will provide additional fabrication capacity for current and future projects, such as carbon capture and storage, and exotic piping for hydrogen/ammonia, says Seet.
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In addition, Dyna-Mac, holding a cash balance of $128 million, is looking for more recurring revenue streams in similar industry segments and it’s exploring M&A opportunities on this front.
"We believe this direction will be positive for shareholders as it will add more certainty to earnings and cash flows, especially during downturns."
"We also maintain a bullish long-term outlook for Dyna-Mac as it is a key beneficiary of this multi-year FY2022-FY2026 upcycle," adds Seet.
