Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Thursday, April 3rd, 2025

Dyna-Mac’s Growth Potential: Estate Pushes Back on Hanwha’s Offer

Date: 24 September 2024
Broker: Lim & Tan Securities


Estate’s Rejection of Hanwha’s Offer

The estate of Dyna-Mac’s founding shareholder, Desmond Lim Tze Jong, has voiced concerns regarding Hanwha Group’s tender offer of 60 cents per share, stating that it does not adequately reflect the company’s long-term intrinsic value. Desmond Lim, who was the executive chairman and CEO of Dyna-Mac, passed away unexpectedly on October 26, 2019, at the age of 61. His estate, which holds the largest share in the company at approximately 27%, has emphasized that Dyna-Mac has undergone significant transformation post-pandemic and is well-positioned for strong growth in the coming years.

Dyna-Mac’s Financial and Market Position

As of the first half of FY2024, which ended June 30, Dyna-Mac reported a robust net order book of S$681.3 million, with deliveries scheduled through FY2026. The estate highlighted that the company is poised to further increase its order book, particularly due to the addition of new yard facilities. Dyna-Mac is positioned in the floating production storage and offloading (FPSO) sector, which is expected to experience substantial growth. This, combined with the company’s high net-cash position, potential dividends, and higher profitability outlook, supports the estate’s claim that the offer price of 60 cents does not reflect the company’s true value.

Estate’s Long-Term Commitment

The estate has reiterated its commitment to continuing the legacy of Dyna-Mac’s founder. It has remained invested through challenging times, including cyclical downturns, energy crises, and the COVID-19 pandemic, without losing faith in the group’s potential. The estate believes that any acquisition offer should align with Dyna-Mac’s true value and growth potential, which they feel has not been recognized in Hanwha’s offer.

Hanwha’s Tender Offer and Market Reactions

Hanwha Group, a Korean-listed conglomerate, made a tender offer of 60 cents per share for all Dyna-Mac shares it does not already own. The offer represents a 21.2% premium to Dyna-Mac’s last-traded price of 49.5 cents on September 10, 2024. Additionally, it offers premiums of 6.2%, 14.1%, 29.3%, and 50% to the one-, three-, six-, and twelve-month volume-weighted average prices (VWAP) of Dyna-Mac shares, respectively.

Despite the offer, analysts from Maybank Securities, OCBC Investment Research (OIR), and Lim & Tan Securities have advised investors to “wait and see.” All three analysts maintain a “buy” recommendation on Dyna-Mac, with target prices ranging from 64 cents to 71.5 cents.

Analyst Valuations

The Edge Singapore’s analyst, Thiveyen Kathirrasan, noted that Hanwha’s offer is “fair,” estimating Dyna-Mac’s intrinsic value at 61 cents per share. On the other hand, Lim & Tan Securities set their target price at 71.5 cents, while the consensus average target price falls between 64 and 71.5 cents. Dyna-Mac currently trades at 9.9x forward price-to-earnings ratio (P/E), with an ex-cash P/E of less than 5x.

Conclusion

Dyna-Mac’s market capitalization stands at approximately S$702 million. While the company has undergone substantial transformation and growth, the estate and analysts agree that Hanwha’s 60-cent offer does not adequately capture the company’s future potential. As a result, investors are advised to await further developments, including the independent financial adviser’s (IFA) recommendation, before making a decision. Lim & Tan Securities maintains a “Hold Tight” recommendation on Dyna-Mac as of September 24, 2024.

Lenovo Q2 FY25 Results: Strong Growth and AI PC Momentum Set to Fuel Future Earnings

Lenovo Group: Financial Analysis and Future Outlook Lenovo Group: Financial Analysis and Future Outlook Broker: UOB Kay Hian Date of Report: Monday, 18 November 2024 Introduction Lenovo Group, a leader in the computer hardware...

Seatrium Ltd Bearish Reversal Signals Potential Downside Ahead

Trendspotter: Bullish Gold, Bearish Seatrium, and More – April 2, 2025 CGS International Research Report Breakdown In this comprehensive analysis, we dive into the key insights and market trends highlighted in the latest CGS...

Westports Holdings 2024 Preview: Gateway Growth Amid Regional Port Competition

Westports Holdings Bhd: Comprehensive 2025 Analysis and Recommendations Comprehensive Analysis of Westports Holdings Bhd Broker: UOB Kay Hian Date of Report: Friday, 17 January 2025 Introduction UOB Kay Hian’s latest report offers a detailed...