Maybank Securities' Jarick Seet has maintained his "buy" call and 35 cents target price on Dyna-Mac Holdings, in his 1QFY2023 earnings preview expected on May 9.
Despite the first quarter being the seasonally weakest three months, Seet, in his May 4 note, states that Dyna-Mac will report revenue that has nearly doubled to $80 million and earnings up 61% y-o-y to $3 million, as the company rides on the market upcycle.
Dyna-Mac, 24.3% held by Keppel Corp, focuses on building so-called top-side modules for rigs used by the oil and gas industry.
Citing strong industry demand, Seet expects Dyna-Mac to report an order win of more than $300 million in the near term, and another $300 million order by end of the year, which would bring its order book to a record.
Seet is also expecting better margins due to higher operating leverage and the positive supply-demand landscape placing fabricators in a good position to raise prices.
With a cash balance of $184.5 million, Seet believes Dyna-Mac might explore acquisitions and if so, a potential catalyst for the company's growth.
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Dyna-Mac is now trading at an ex-cash valuation of just 5.3x current year FY2023 earnings, versus global peers' 28.6x.
