The IFA, ZICO Capital, also recommends the company’s shareholders to accept Hanwha’s offer.

Dyna-Mac’s independent financial advisor (IFA), ZICO Capital, has deemed Hanwha’s latest offer of 67 cents per share to be “fair and reasonable”. As such, it recommends the company’s shareholders to “accept” the offer.

In its letter, ZICO notes that Hanwha Group’s final offer price represents a premia ranging between 18.58% to 67.50% over Dyna-Mac’s respective volume weighted average prices (VWAPs) of the shares traded for the 12-, six-, three- and one-month periods before and including the last trading day, Sept 10, before the offer was made.

It added that Dyna-Mac’s shares traded at a high of 67.5 cents after the offer was announced on Sept 11, although the closing prices between then and Oct 15 (the latest practicable date) were below the final offer price. The final offer price is also within the range of the estimated value of Dyna-Mac’s shares of 66 cents and 68 cents.

However, ZICO also pointed out that the final offer price of 67 cents represents a discount of about 0.74% to the highest-traded price of Dyna-Mac’s shares from Sept 12 to Oct 15. The company’s P/E is within the range of but is below the mean and median of the P/E ratios of comparable companies including Shanghai-listed BOMESC Offshore Engineering Company Limited (“BOMESC”) and Hong Kong-listed Penglai Jutal Offshore Engineering Heavy Industries Co., Ltd.

ZICO also considered other publicly-listed companies that had a market capitalisation of above $200 million as at Oct 15. These companies derive their revenues mainly from the provision of engineering, procurement and construction services, and other related services, for the oil and gas and marine industry. As such, they can be considered “reasonable proxies” for the industry in which Dyna-Mac operates.

Dyna-Mac’s EV/ebitda and diluted EV/ebitda, as implied by Hanwha’s final offer are also within the range of but are below the mean and median of the EV/ebitda ratios of the comparable companies.

At the same time, ZICO believes that the offer is “reasonable” as the final offer price represents a premium of 67.5% to the consideration per share paid by Hanwha Aerospace and Hanwha Ocean when they acquired their stakes in May this year.

Dyna-Mac’s shares were also not actively traded during from Sept 11 to Oct 15, with the average daily trading volume of the company’s shares during the 12-month, 6-month, 3-month and 1-month periods prior to and including the last trading day were in the range of 1.92% to 2.60% of the free float. The average daily traded volume of the shares represented 1.99% of the free float on Sept 10.

The offer also represents an opportunity for Dyna-Mac’s shareholders to realise their investment at a premium without incurring brokerage and other trading costs, ZICO pointed out.

However, the IFA also noted two factors undermined the “reasonableness” of the offer. First, Dyna-Mac’s net cash position, including its Singapore treasury bills as at June 30, came up to $307.7 million, ZICO noted. The company’s adjusted cash per share amounted to 28 cents while its diluted cash per share amounted to 27 cents.

In addition, the company’s outlook is expected to be “generally favourable”, supported by its current orderbook, which reflects “sustained market demand” for Dyna-Mac’s floating production storage and offloading (FPSO) topside modules. The FPSO market is also projected to grow at a compound annual growth rate (CAGR) of 14.6% from 2020 to 2032.

Furthermore, Dyna-Mac’s orderbook has been on an increasing trend over the period under review, which spans from FY2021 to 1HFY2024. The company’s orderbook stood at $438.2 million as at Dec 31, 2023 and $681.3 million as at June 30.

Shares in Dyna-Mac closed flat at 66.5 cents on Oct 23.

See also:

• Hanwha Group makes tender offer of 60 cents per share for Dyna-Mac (update)
• ZICO Capital appointed as IFA for Dyna-Mac's offer
• Estate of Dyna-Mac’s founding shareholder does not find Hanwha’s cash offer compelling
• Hanwha Group explains rationale behind Dyna-Mac’s offer price
• Standoff as Hanwha keeps 60 cents offer price for Dyna-Mac in offer document
• Estate of Dyna-Mac’s founding shareholder issues follow-up statement after offer document
• Hanwha Group announces ‘final offer’ of 67 cents for Dyna-Mac (update)