From jpm
Dyna-Mac Holdings Ltd Overweight
UAE calling; S$300 mn+ order wins in the pipeline but earnings impact likely to be more pronounced in 2014
Petrofac-Daewoo wins UAE’s US$3.9 bn Upper Zakum project;
Dyna-Mac likely to win on-shore modules order worth S$200 mn?
As per Upstream, Petrofac-Daewoo have been awarded the US$3.9
billion Upper Zakum project wherein it aims to raise production to
750,000 barrels per day (from 520,000 bpd) with total job involving
150,000 tons of modular processing and other related facilities on 4
artificial islands. We believe Dyna-Mac is well-positioned to win S$200
mn worth of on-shore module jobs (~20,000 tons) from Petrofac-
Daewoo relating to this project potentially: (a) opening up the UAE
market to it, (b) success in onshore modules (historically been in
offshore FPSO modules), and (c) new relationship with
Daewoo/Petrofac. We expect this order to potentially come through
April / May 2013 and believe DMHL is likely to be involved in more
jobs out of the UAE in the medium term.
We also see medium term success for DMHL in the
FPSO module market including Ghana & Angola (x 2 FPSO modules
each). Overall we expect DMHL to have a record year with order wins
worth S$375 million in 2013.
Earnings impact likely to be pushed into 2014; muted 2Q13
performance likely: While we expect 2013 to be potentially be the best
‘order win’ year for DMHL, given the: (a) delay in order awards, and (b)
monetization of these order-wins into late-2013 (rather than early 2013)
we cut 2013E / 14E earnings by 25% / 9%. Our Jun-14 SOTP-based PT
(rolled from Dec-13) continues to stand at S$0.64 based on 15x P/E
‘plus’ an estimated net cash of S$65 million. Dyna-Mac continues to
remain our “high-conviction” stock idea amongst Singapore small cap
Offshore & Marine stocks on rising long term demand of FPSOs.
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