OCBC Investment Research upgraded oil and gas services firm Dyna-Mac Holding Ltd to buy from hold and raised its target price to S$0.45 from S$0.34, citing an increase in production capacity and growth in its non-module business.
By 0142 GMT, shares of Dyna-Mac were 1.3 percent higher at S$0.405, but have fallen about 4.7 percent since the start of the year, compared to the FT ST Oil and Gas Index's 21.9 percent gain.
Dyna-Mac plans to buy 70 percent stake in Paliy Marine Fabricator (Guangzhou) Ltd for S$3.8 million, which could potentially increase Dyna-Mac's maximum output by 70 percent, said OCBC.
"Dyna-Mac is confident of getting sufficient new orders to fill the newly acquired yard, by leveraging on its good track record and close working relationships with its global clients," said OCBC.
The brokerage said it expects Dyna-Mac to ramp up operations at its new yard over the next 12 months.
It is also expanding other businesses, taking on other jobs such as turrets and land-based modules, which will help it to diversify its product offerings and lower risk, OCBC said.
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0942 (0142 GMT)
(Reporting by Charmian Kok in Singapore; email@example.com)