Dyna-Mac

Dyna-Mac: No news on the decline after the Company posted its results on 27 Feb, which was in-line with Street estimates. OCBC has a BUY rating and TP of $0.57 under review. Nomura also issued a rpt post its ASEAN conference, stating the current order book of $134m has new order-undergoing negotiation phase worth $500m. Mgmt expects revenues and earnings in 2013 to be flat over 2012 despite rising new orders. However, management expects both revenue and earnings growth to pick up substantially in 2014 as new orders secured in 2013 are executed. The group enjoys gross profit margins within the 22-26% range and expects these to be sustained, although variation orders on contracts could provide some upside to margins. OCBC reported that the Group's order book of $134m provides cover for only about 2 quarters. This makes it vulnerable to any delays in the awards of new contracts; another concern is the labour crunch in Singapore, which could put pressure on its margins. OCBC downgrades to HOLD rating, TP of $0.50 on 16x forward earnings. Dyna-Mac is in a net cash position as at 31 Dec FY12, with return on equity at 19%. Counter trades at 15.7x P/E.