Dynamac

Dynamac: JP Morgan initiates coverage with Overweight Call and $0.70 TP. Note of potential upside with grp's (net orderbook at S$203 mn as of 1H12) is a “leading” offshore specialist involved in the fabrication and assembly of topside modules for FPSOs and FSOs for leading FPSO owners including SBM, Modec and Bumi Armada. DMHL also has a collaboration agreement with Keppel Shipyard (Keppel holds 27.8% in DMHL) where Keppel focuses on conversion while DMHL on topside modules. Add that with over 60 FPSO projects expected to be awarded over the next 3 years globally (majority in Asia, Africa and Brazil), we believe DMHL is well positioned to win a number of orders for topside modules on the back of its (a) execution track record (157 modules delivered since 1998), strong relationship with key FPSO owners (90% of revenues from SBM, Modec, BAB MK) and (c) Keppel Collaboration agreement.