Established in 1990, Dyna-Mac (SGX: NO4) has grown into recognised contractor in offshore and marine projects for the energy market. Dyna-Mac can count industry heavyweights, such as Exxon Mobil, Shell, ConocoPhillips, Schlumberger, Total, Chevron, Siemens, BP, Seatrium, Keppel, and many more as its clients and partners.
Its specialisation is in FPSOs (Floating Production Storage and Offloading vessels), FSOs (Floating Storage and Offloading vessels), FLNGs (Floating Liquified Natural Gas vessels) and FSRUs (Floating Storage and Regasification Units).
Known for its innovative and cost-effective solutions, its piping solutions division also fabricates pipe spools for both onshore and offshore projects, including carbon capture and storage initiatives.
Those keeping track of the company would also know that Dyna-Mac has recently rejected the voluntary conditional offer for $0.60 per share by South Korean shipbuilder Hanwa Ocean.
Here are 5 things you should know about Dyna-Mac’s financials, business and plans for international expansion.
#1 Could You Share Some Of The Key Drivers Behind Dyna-Mac’s 3.8x Year-On-Year Jump In 1H2024 Net Profit?
Dyna-Mac’s 3.8x year-on-year increase in net profit for 1H2024 stems from several factors. We completed major projects, boosting revenue by 42.5% to S$259.7 million. Our gross profit soared by 191.3% to S$71.7 million, thanks to improved project execution and cost management.
Other income rose 116.3% to S$7.6 million, driven by higher interest income, forex gains and increased scrap income. Net profit reached S$38.8 million, a 280.3% increase from 1H2023, due to project completions, enhanced productivity and increased project volume. Our strong order book of S$681.3 million as of June 2024 reflects sustained demand for our services, particularly FPSO topside modules.
Dyna-Mac also adopts a cost-plus pricing strategy for certain projects. This method applies particularly to some of the materials and involves charging the costs incurred plus an agreed-upon profit margin. This strategy not only guards against price volatility but also ensures transparency for our clients, aligning with best practices in financial management and managing client relationships.
#2 Dyna-Mac Has Traditionally Been Based In Singapore, But It Seems There Are Plans For International Expansion. Can You Share More About This?
As a pure-play company, Dyna-Mac’s specialisation and deep industry expertise allow us to swiftly adapt to market changes and customer needs.
For example, we face competition from Chinese firms in the offshore and marine engineering sector, but our focused approach and expertise in the hydrocarbons industry positions us uniquely apart in a competitive market.
We have also built our expansion strategy on this, while tailoring to each region’s strengths and opportunities. In Singapore, we have delivered 17 modules weighing 41,000 metric tonnes with zero lost-time incidents in 1H2024, underpinning our future-proofing strategy focused on sustainable growth through hydrogen and carbon capture projects.
Source: Dyna-Mac
In China, we are offering value-added services by leveraging our expertise and collaborating with local partners to build modules, optimising costs and timelines.
Our Middle East focus remains on oil and gas, utilising the region’s excellent facilities and infrastructure for module fabrication, supported by skilled personnel from Singapore. This diversified approach positions us for sustainable growth and value creation across markets.
To achieve all this, we’re investing in yard development, expanding fabrication capacity by 70% to meet growing demand. We’re enhancing productivity through advanced technologies and equipment upgrades.
We’re also exploring M&A opportunities, particularly targeting companies offering recurring income streams like plant maintenance services.
#3 How Is Your Company Committed To Sustainability And ESG – Which Have Increasingly Become Key Industry Focus?
Dyna-Mac is deeply committed to sustainability across environmental, social and governance (ESG) domains. Our environmental initiatives include decarbonisation efforts, energy and carbon footprint management, and robust waste and effluents management. We prioritise employee health and safety and promote fair employment practices.
Our strong corporate governance ensures transparency and ethical business practices, as recognised by our recent Most Transparent Company Award (Energy) in September 2024 from the Securities Investors Association of Singapore (SIAS).
We actively engage stakeholders and innovate in clean energy, venturing into green hydrogen and ammonia projects. Through strategic partnerships, we continually enhance our sustainable capabilities, balancing growth with environmental stewardship and social responsibility.
#4 What Is The Group’s Biggest Risk Or Challenge In The Next 1-3 Years And How Is The Group Preparing Itself For It?
One of the Group’s biggest risks over the next 1-3 years is the potential volatility in the global energy markets, especially with the ongoing transition towards cleaner energy sources. This shift may impact demand for traditional oil and gas infrastructure, which could affect our core business of fabricating topside modules for FPSO vessels.
To address this, Dyna-Mac is proactively diversifying into emerging sectors such as carbon capture and storage (CCS) technologies and hydrogen solutions. By broadening our portfolio to align with the global move towards cleaner energy, we aim to mitigate the impact of market fluctuations.
Furthermore, we are continuously strengthening our operational efficiencies and maintaining a robust order book to ensure we remain resilient in a changing market landscape. This strategy positions us to navigate potential challenges while capturing opportunities in both conventional and new energy markets.
#5 Why Should Investors Take A Closer Look At Dyna-Mac?
Dyna-Mac offers a compelling investment opportunity due to our solid financial performance in 1H2024. Our strong S$307.7 million net cash position as of 30 June 2024 enables us to maintain a healthy working capital position as well as to seize opportunities.
We operate in the thriving FPSO market, with a robust S$681.3 million order book extending through FY2026.
We’re strategically diversifying into clean energy sectors like carbon capture and storage and hydrogen solutions. Our commitment to sustainability aligns with global trends towards cleaner energy.
We leverage advanced technologies for enhanced project execution and efficiency, maintaining our competitive edge in the market.
Additionally, we’re committed to rewarding shareholders through dividends. Our balanced approach supports our growth objectives, enhances operational efficiency, and delivers value to shareholders.
Editor’s Note: Some answers for this article were extracted from the SGX 10 in 10 series published on 24 September 2024 and republished with permission. You can read more Dyna-Mac (SGX: NO4) on the SGX Website.
Read other features companies from SGX’s 10 in 10 series on the DollarsAndSense website.
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