Dyna-Mac

Dyna-Mac: Supported by the growing global fleet of FPSOs (both newbuild and converted units), Dyna-Mac is optimistic that demand for topside module fabrication work will be fairly healthy over the next 3-5 years. In addition, management pointed out that Singapore yards such as Keppel Corp and SembMarine remain market leaders in securing FPSO conversion jobs. Compared to 2012, Dyna-Mac’s 9M13 gross-profit and net-profit margins contracted by 2.5pp and 3.3pp, respectively. The company attributed this to weaker-than expected productivity levels in some of its overseas operations. Management stated that it is putting in place more stringent cost controls and additional productivity improvement measures, which is expected to achieve gross-profit margin improvement next year. Based on Bloomberg consensus data, Dyna-Mac is trading at a 13.5x PER for 2014E, compared with the Southeast Asia-based yard peer average one-year forward PER of about 11.4x.