MARKET watchers are recommending that shareholders of offshore oil-and-gas contractor Dyna-Mac think twice about accepting a voluntary conditional cash offer for their shares.
South Korean company Hanwha on Wednesday (Sep 11) launched the offer to take management control of Dyna-Mac at S$0.60 a share.
However, Maybank Securities is recommending Dyna-Mac shareholders “wait and see” for a potentially better deal, while OCBC Investment Research said shareholders should reject the offer.
In a report on Thursday, Maybank analyst Jarick Seet said the offer price, though fair, is on the lower end of the fair value range.
“Given this is not the final offer, we think it would be better for investors to wait for a revised offer that is either closer (to) or higher than our target price of S$0.64,” he added.
Seet’s confidence of a better offer comes amid robust demand for floating production storage and offloading (FPSO) vessels, Dyna-Mac’s high net cash position, potential dividends, as well as higher earnings estimates in the next few years.
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“Dyna-Mac’s order book has doubled to S$896 million in the past year and it has 50 per cent more land, so we expect the company to execute its orderbook at a faster pace,” added the analyst.
Seet is maintaining his “buy” call on the counter.
Meanwhile, OCBC Investment Research highlighted that the offer price of S$0.60 “does not fully reflect Dyna-Mac’s true value”. Hence, analyst Ada Lim does not recommend that existing shareholders accept the offer.
On Thursday, she also noted that the offer price is lower than the research house’s fair value price of S$0.665 by 10 per cent, and Refinitiv consensus’ target price by 6.3 per cent.
It also represents a 2.4 per cent discount to Dyna-Mac’s highest year-to-date share price of S$0.615, as at the close of Aug 13, said Lim.
However, as Lim is positive on the company’s growth prospects and ability to win higher value contracts, she maintained her “buy” call on Dyna-Mac.
“Dyna-Mac is well-positioned for substantial growth in the current FPSO upcycle… as well as continued margin expansion on improved productivity and disciplined cost control,” she said.
Shares of Dyna-Mac were trading 0.8 per cent or S$0.005 higher at S$0.625 as at 1.28 pm on Friday.
