Dyna-Mac Holdings reported a strong 31.3% YoY surge in its 1Q14 revenue to S$78.9m. PATMI grew by a smaller magnitude of 6.5% to S$7.1m, but in-line with our expectations. This was largely due to a weaker gross margin and 43.3% jump in its administrative expenses. Looking ahead, we forecast Dyna-Mac to clinch S$240m of new orders in 2014, of which S$92m has already been secured YTD. As its flagship Singapore yards are already running at full-capacity, it is pertinent that Dyna-Mac executes well on the ongoing projects at its Johor and Guangzhou yards in order to convince its customers to place orders at these yards instead. The group continues to receive active tender enquiries from both its long-term and new clients. We keep our earnings forecast intact, and maintain our BUY rating and S$0.47 fair value estimate on Dyna-Mac. FY14F dividend yield is also attractive at 5.2%.
1Q14 PATMI in-line with our expectations
Dyna-Mac Holdings reported a strong 31.3% YoY surge in its 1Q14 revenue to S$78.9m, and this made up 29.3% of our FY14 forecast. However, PATMI grew by a smaller magnitude of 6.5% to S$7.1m, in-line with our expectations (23.7% of our full-year estimate). This was largely due to a weaker gross margin (22.0%; -2.4 ppt YoY) given price pressures from its sub-contractors and a 43.3% jump in administrative expenses to S$8.3m as headcount and salaries were increased. Hence, PATMI margin came in at 9.1%, versus 11.2% in 1Q13. Management highlighted that it will seek to pass on some of these cost pressures to its customers during future rounds of project tenders.
YTD order wins amount to S$92m
Dyna-Mac also announced that it has secured new fabrication orders from two repeat customers worth a provisional sum of S$50m. Fabrication of these orders is expected to commence in 2Q14 at its Singapore and Johor yards, with delivery scheduled in 3Q15. Including this latest contract win, Dyna-Mac’s net order book now stands at S$342m (as at 12 May 2014). We forecast Dyna-Mac to clinch S$240m of new orders in 2014, of which S$92m has already been secured YTD. One key issue is that its flagship Singapore yards are already running at full-capacity, and hence it is pertinent that Dyna-Mac executes well on the ongoing projects at its Johor and Guangzhou yards in order to convince its customers to place orders at these yards instead.
Maintain BUY
Dyna-Mac continues to receive active tender enquiries from both its long-term and new clients, as Brent oil prices have stayed firm at above US$100 per barrel, while production levels remain well below target for certain countries such as Brazil and Angola. Another area which Dyna-Mac is looking to penetrate is the LNG sector. We keep our earnings forecast intact, and maintain our BUY rating and S$0.47 fair value estimate on Dyna-Mac (pegged to 16x FY14F EPS). Its attractive FY14F dividend yield of 5.2% will also provide downside support to its share price, in our opinion.
Dyna-Mac Holdings reported a strong 31.3% YoY surge in its 1Q14 revenue to S$78.9m, and this made up 29.3% of our FY14 forecast. However, PATMI grew by a smaller magnitude of 6.5% to S$7.1m, in-line with our expectations (23.7% of our full-year estimate). This was largely due to a weaker gross margin (22.0%; -2.4 ppt YoY) given price pressures from its sub-contractors and a 43.3% jump in administrative expenses to S$8.3m as headcount and salaries were increased. Hence, PATMI margin came in at 9.1%, versus 11.2% in 1Q13. Management highlighted that it will seek to pass on some of these cost pressures to its customers during future rounds of project tenders.
YTD order wins amount to S$92m
Dyna-Mac also announced that it has secured new fabrication orders from two repeat customers worth a provisional sum of S$50m. Fabrication of these orders is expected to commence in 2Q14 at its Singapore and Johor yards, with delivery scheduled in 3Q15. Including this latest contract win, Dyna-Mac’s net order book now stands at S$342m (as at 12 May 2014). We forecast Dyna-Mac to clinch S$240m of new orders in 2014, of which S$92m has already been secured YTD. One key issue is that its flagship Singapore yards are already running at full-capacity, and hence it is pertinent that Dyna-Mac executes well on the ongoing projects at its Johor and Guangzhou yards in order to convince its customers to place orders at these yards instead.
Maintain BUY
Dyna-Mac continues to receive active tender enquiries from both its long-term and new clients, as Brent oil prices have stayed firm at above US$100 per barrel, while production levels remain well below target for certain countries such as Brazil and Angola. Another area which Dyna-Mac is looking to penetrate is the LNG sector. We keep our earnings forecast intact, and maintain our BUY rating and S$0.47 fair value estimate on Dyna-Mac (pegged to 16x FY14F EPS). Its attractive FY14F dividend yield of 5.2% will also provide downside support to its share price, in our opinion.
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