Dyna-Mac Holdings Ltd

Dyna-Mac Holdings Ltd ("Company") is issuing 436m shares (186m New shares and 250m Vendor shares) at $0.35 each. 5m shares will be via public offer and 431m shares via placement. The Company has also provided for up to 30m shares under  an over-allotment scheme.  The application will end on 28 Feb at 12pm.


The Company is a multi-disciplinary specialist provider of detailed engineering, procurement and construction services to the offshore oil & gas, marine construction and other industries. Revenue and net profit has been swinging from FY2008 to FY2010. I believe this is in tandem with the demand for oil & gas. Revenue for FY2010 comes in at $218.5m and net profit was $25.5m. HY2011 revenue and net profit came in at below HY2010 by more than 20%. Assuming the full year adjusted EPS comes in at Singapore 2.24 cents, the company is listing at a forward PER of 15.6x. The market cap at IPO price is $315.1m. Investors should also note that the NTA per share post IPO is 11.33c versus the 35c paid.


The Company is heavily dependent on SBM and Modec for its business and this risk was once again highlighted on the front cover of the prospectus. It is interesting to note that post listing, Lim Tze Jong and Keppel Shipyard will control 79.4% of the company. In addition, Keppel Shipyard will have the first right of refusal should Mr Lim decide to sell out. It is a good sign that Keppel Shipyard would like to acquire the company strategically as long as the 2 major customers have no issue with Keppel becoming a substantial shareholder. 


While i like the sector and the company, for the purpose of this listing, i believe it is already fairly priced. Keppel Shipyard coming in as a cornerstone investor will no doubt help to support its share price but the company is listing in a challenging environment where there are political unrest in the middle east. There isn't much public float to talk about and the share price is likely to be supported if the over-allotment option is activated.  My personal view is that there is not much 'meat' to stag but long term investors may want to consider buying this company should share price drop post its listing.