SG: MARKET PULSE: Strategy 2014, Dyna-Mac Holdings (29 Nov 2013)

Stock Name: Dyna-Mac
Company Name: DYNA-MAC HOLDINGS LTD.

Research House: OCBC

Price Call: BUY

Target Price: 0.47

MARKET PULSE: Strategy 2014, Dyna-Mac Holdings

29 Nov 2013

KEY IDEA Strategy 2014: Playing catch-up soon? While the Singapore stock market is likely to end 2013 flat, the economic outlook for 2014 holds some potential for a re-look at Asian and Singapore equities. We expect developed markets issues which dominated global headlines in the last two years to remain, largely centering on slowing economic growth, debt and high unemployment. However, the recent 3Q corporate results in Singapore points to a cautiously optimistic guidance for 2014, and this could mean high single-digit earnings growth for the benchmark STI stocks. We continue to have an OVERWEIGHT for the Banking and Oil & Gas sectors, and are selectively positive on certain Property and REIT stocks. The Straits Times Index (STI) is currently trading at undemanding valuations of 13.7x FY14 earnings, 1.35x book and with decent dividend yield of 3.3%. Our stock picks for 2014 in the big cap space are CapitaLand, CapitaCommercial Trust, DBS, Ezion Holdings, Keppel Corporation, Keppel Land, Starhill Global, Suntec REIT and UOB. In the mid-cap space, our stock picks are KSH, Nam Cheong and Sheng Siong Group. (Carmen Lee) MORE REPORTS Dyna-Mac Holdings: Strong proxy to global FPSO growth prospects Dyna-Mac Holdings looks set for a busy year ahead in 2014, buoyed by improving prospects in the FPSO market and a robust net order book of S$346m (as at 13 Nov 2013), thanks to YTD order wins of ~S$320m. There are positive developments happening for its major customers; while Dyna-Mac is also actively pursuing six to seven FPSO projects which it is confident of winning. If successful, this may culminate in healthy order wins amounting to ~S$280-350m for FY14, according to our estimates. We update our model and assumptions following a change in analyst coverage; and now forecast revenue and PATMI growth of 20%/-7% for FY13 and 4%/15% for FY14, respectively. Rolling forward our valuations to 16x FY14F EPS, we derive a higher fair value estimate of S$0.47 (previously S$0.44). Upgrade Dyna-Mac from Hold to BUY. (Wong Teck Ching Andy)

For more information on the above, visit www.ocbcresearch.comfor the detailed report.

NEWS HEADLINES - Swissco has won S$27m of charter contracts. - Etika has recorded FY13 PATMI of RM7.4m, down 66%. - Starland reported FY13 net profit of CNY2.4m versus a loss of CNY6.3m a year ago. - Casa has bought the remaining 50% stake in its Moroccan JV company. - China Aviation Oil (Singapore) Corporation Ltd, has expanded its operations in Europe with the establishment of a wholly owned subsidiary in the UK. - Singapore Airlines is adding a 5th daily Tokyo flight. - China Jishan has signed an agreement to form a JV to provide financial services.