Dyna-Mac

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Dyna-Mac Secures Fabrication Contracts For $150 Million From Long-Standing Customers

Dyna-Mac Holdings Ltd announced that the Group has secured several fabrication contracts totalling approximately $150 million from its long-standing customers.

Completion of these fabrication contracts are scheduled to spread over 2 years, and as such, the Group expects to derive revenue streams from these orders mainly from 3Q2019 up to FY2020.

Barring deferral or rescheduling by customers or other unforeseen circumstances, the above orders are expected to have a positive impact on Dyna-Mac’s earnings per share and net tangible assets for the current financial year ending 31 December 2019.

[weijian]

To recap, Hanwha bought its existing ~25% stake from Keppel Holdings just a few months ago at ~35cents/share. On hindsight, the Koreans wanted control.

Hanwha launches voluntary conditional cash offer for Dyna-Mac at S$0.60 a share

The offer price represents a premium of 21.2 per cent over Dyna-Mac’s last traded price of S$0.495.

It also represents premiums of 6.2 per cent, 14.1 per cent, 29.3 per cent and 50 per cent over the volume-weighted average price for the one-month, three-month, six-month and 12-month periods, respectively – up to and including Sep 10, when the counter was last traded.

Hanwha said that it does not have any intention presently to actively pursue the delisting of Dyna-Mac from the mainboard.

However, if the free-float requirement is not satisfied at the close of the offer and trading is suspended, Hanwha said that it does not intend to undertake or support any action to lift the trading suspension.

Hanwha, the offeror, plans to exercise its right to compulsorily acquire all the offer shares not acquired under the offer if it receives valid acceptances in respect of not less than 90 per cent of the total number of issued shares.

https://www.businesstimes.com.sg/compani...0-60-share

[weijian]

The merger arbitragers are pretty daring to be selling insurance for pretty low premiums.

I have no idea of Dyna-Mac's intrinsic value but did the Keppel Capital allocators made a mistake selling their 25% stake at 35cents few months ago? Does this reflects the capability of these allocators at Keppel Capital OR is this hindsight bias at work?

The MayBank sell-side analysts opine that "60cents is a fair price but on the lower end". In June2024, its TP was still 52cents before it was lifted to 62cents 1 month later. So I reckon beauty is always in the eye of the beholder. Without a prince, Cinderella is probably not a fairy tale!

Brokers’ take: Dyna-Mac shareholders should wait for better offer, analysts say

South Korean company Hanwha on Wednesday (Sep 11) launched the offer to take management control of Dyna-Mac at S$0.60 a share.

In a report on Thursday, Maybank analyst Jarick Seet said the offer price, though fair, is on the lower end of the fair-value range.

Shares of Dyna-Mac : NO4 +0.81% were trading 0.8 per cent or S$0.005 higher at S$0.625 as at 1.28 pm on Friday.

https://www.businesstimes.com.sg/compani...alysts-say

[weijian]

Show "them" the money. So now, it looks obvious that the merger arb fellas are the smart money, for now at least. Personally, in view of all the depressed valuations, I have been exploring merger arbitrage on the local bourse - looking for money-making opportunities and also "return on brain damage". Will be interesting to see how this transpires.

Glad to see that the folks who got rich after Grandma dies, are making good sense on how to get richer on Grandma's legacy.

Estate of Dyna-Mac’s founding shareholder says voluntary conditional cash offer not compelling

It noted that Lim had over the years “diligently” developed the company into a global contractor, from its initial business in the construction of piping systems and steel structures.

“The estate is not opposed to proposed offers for Dyna-Mac, but like all shareholders, it strongly believes that any offer must be compelling and reflect the true value of Dyna-Mac,” it added.

https://www.businesstimes.com.sg/compani...compelling

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A generous 11.7% increase in offer price.

Hanwha Group Announces Final Offer for Dyna-Mac

The Final Offer of S$0.67 per Share exceeds all previous closing prices of the Shares for the past 10 years and there is no intention of further increases

https://links.sgx.com/FileOpen/Press_Rel...eID=821893

[weijian]

About 1 week ago, Hanwha had successfully obtained >90% of the shares it didn't own - hence allowing it to exercise its right of CA, which it did so. In terms of returns, this is a happy ending for OPMIs and merger arbs.

As usual, the ever-reliable Ben Paul had some relevant criticism on the IFA's letter. However I realize that all of Ben Paul's criticism of the IFA's justifications, were actually irrelevant as the final methodology that the IFA used to quantify their fair and reasonable opinion, did not involve those that he had raised.

One more point is that for these PPE-heavy companies, the previous takeover of Keppel FELS by Seatrium had already shown that accounting values for PPE (and so equity) is not very relevant. Dyna-Mac's (world beating) ROE of 55.8% is probably because its CAPEX had already been completed much earlier and with a very conservative depreciation policy, its PPE book value is much less than replacement value. As for Seatrium, its BS consists of relatively new yards (especially their Tuas mega yard) and also the goodwill it has to recognize for buying "above book value" of Keppel FEL, so the equity base is surely much larger on paper. Post acquisition, Hanwha will recognize the goodwill it paid for Dyna-Mac on its own BS and so the "new ROE" will be probably be much closer to Seatrium.

Hanwha’s offer for Dyna-Mac shouldn’t be compared to past non-privatisation deals

Another point raised by the IFA is that the final offer price of S$0.67 per share is nearly six times Dyna-Mac’s adjusted net asset value (NAV), which is significantly higher than the 1.26 times NAV-to-price ratio of seven comparable companies, including Singapore-listed Seatrium and Malaysia Marine and Heavy Engineering. However, these comparable companies had an average trailing 12-month return on equity (ROE) of 11.2%, while Dyna-Mac had a much higher ROE of 55.8%. Dyna-Mac’s return on assets and net profit margin also surpassed those of the other companies.

https://www.minichart.com.sg/2024/11/03/...ion-deals/