Maybank Securities' Jarick Seet has kept his "buy" call on Dyna-Mac Holdings, along with a higher target price of 40 cents from 35 cents, following the company's 1QFY2023 earnings that beat his expectations.
For the three months ended March, Dyna-Mac reported earnings of $3.9 million, up 108% y-o-y, while revenue was up 29% y-o-y to $87.2 million.
Traditionally, the first quarter is the weakest. Yet, the company is keen to expand its yard space, suggesting "robust demand" ahead. Its current orderbook stands at $338 million.
"We expect better quarters ahead for DynaMac and remain confident in management’s execution ability," writes Seet in his May 10 report.
From Seet's perspective, the offshore and marine sector, after going through six years of "sluggishness", is now seeing a "revival".
Dyna-Mac, which builds topside modules for rigs, has a net cash position of $122.3 million, which puts it in a position to make aquisitions to increase its proportion of recurring revenue.
This will help provide some "stability" to the company's current earnings profile, which is almost reliant on project-based contracts.
"We also maintain a bullish long-term outlook for Dyna-Mac as we believe it’s one of the key beneficiaries of this multi-year upcycle," adds Seet.
