Investment Opportunities in Dyna-Mac, Food Empire, Q&M Dental, and Rex International: Strategic Moves and Market Outlook

Investment Recommendations

• Dyna-Mac Holdings: BUY (Potential upside with a possible offer increase)
• Food Empire: HOLD (Solid growth strategy but long-term horizons)
• Q&M Dental: HOLD (Strategic acquisition with moderate growth prospects)
• Rex International: HOLD (Short-term production challenges but stable long-term outlook)

Investment Thesis and Company Analysis

1. Dyna-Mac Holdings Ltd (SGX: NO4)

   • Financial Results: Hanwha Group has made a tender offer for the shares it does not already own at SGD0.60 per share. This follows a strategic move by Hanwha Aerospace and Hanwha Ocean, which intend to take management control of Dyna-Mac.

   • Stock Impact: The offer, though considered slightly below expectations, remains a fair value for investors. The last target price (TP) set by Maybank was SGD0.64, suggesting potential for an upward revision in the offer price as Hanwha seeks to exceed 50% ownership.

   • Earnings Revisions/Risks: The deal’s success is contingent on achieving a 50% acceptance rate and receiving approval from Singapore’s Competition and Consumer Commission. If these are met, Hanwha could secure full control, providing an upside to Dyna-Mac’s stock.

   • Valuation: Based on current and proposed offers, Dyna-Mac is attractively priced, with potential for a revised offer leading to further stock appreciation.

   • Share Price Catalysts: An increase in the tender offer price and a favorable antitrust ruling would act as strong upward price catalysts.

   • Target Price (TP): SGD0.64
     Stop-Loss Price: N/A
     Recommendation Date: 12 September 2024
     Broker: Maybank Research Pte Ltd

2. Food Empire Holdings Ltd (SGX: F03)

   • Financial Results: Food Empire announced a significant USD80 million investment into a new freeze-dried soluble coffee manufacturing facility in Vietnam. This is part of the group’s broader diversification strategy aimed at growing its ingredients business.

   • Stock Impact: With the construction of the new facility set to begin in 1Q25 and completion anticipated by early 2028, this is a long-term growth play. While the investment reflects strong business potential, short-term stock movement may remain neutral until further milestones are achieved.

   • Earnings Revisions/Risks: The financial outlay is substantial, with operational risks during the facility’s development. However, once completed, the capacity expansion could bolster Food Empire’s revenue streams.

   • Valuation: Current valuations are steady, with limited immediate upside due to the long timeline of the Vietnam facility project.

   • Share Price Catalysts: Updates on construction progress, operational milestones, and increasing demand for freeze-dried coffee products could provide positive stock movement in the medium term.

   • Target Price (TP): N/A
     Stop-Loss Price: N/A
     Recommendation Date: 12 September 2024
     Broker: Maybank Research Pte Ltd

3. Q&M Dental Group (SGX: QC7)

   • Financial Results: Q&M Dental recently signed a memorandum of understanding (MOU) to acquire Veritas Dental Clinic for SGD800,000. This acquisition aligns with Q&M’s ongoing strategy of expanding its dental business in Singapore.

   • Stock Impact: While this acquisition is relatively small in scale, it signifies Q&M’s continued expansion within Singapore’s dental market. The acquisition is seen as a strategic move but is unlikely to significantly impact stock prices in the near term.

   • Earnings Revisions/Risks: Given the small size of the acquisition, revenue growth may be marginal. However, consistent execution of such acquisitions could contribute to steady long-term growth.

   • Valuation: Valuation remains stable with little short-term upside. Investors should consider this a hold for steady dividends and long-term business growth.

   • Share Price Catalysts: Future acquisitions and expansion into new markets could offer potential catalysts for stock growth.

   • Target Price (TP): N/A
     Stop-Loss Price: N/A
     Recommendation Date: 12 September 2024
     Broker: Maybank Research Pte Ltd

4. Rex International Holding Ltd (SGX: 5WH)

   • Financial Results: Rex International reported a decrease in production from its oil fields in Norway and Oman, totaling 11,631 barrels of oil equivalent per day (boepd) in August 2024, down 8.54% from July’s production.

   • Stock Impact: The production decline was attributed to scheduled and unscheduled well interventions. While short-term production has been impacted, the company’s long-term outlook remains stable.

   • Earnings Revisions/Risks: Any further unscheduled maintenance could hamper earnings. However, stable oil prices and Rex’s diversified operations across fields mitigate these risks.

   • Valuation: The current valuation is neutral, with stock prices likely to remain steady barring significant changes in oil production or market conditions.

   • Share Price Catalysts: Improvements in production levels, coupled with rising global oil prices, could serve as positive catalysts for stock movement.

   • Target Price (TP): N/A
     Stop-Loss Price: N/A
     Recommendation Date: 12 September 2024
     Broker: Maybank Research Pte Ltd