Dyna-Mac (SGX: NO4) shares are up another 8% today. NO4 shares have now risen some 108% in the last 6 months - pretty good for a boring industrial. The year to date performance is even better. The driving force here is a change in the background to the real world market. Shipyards and seagoing service companies have had a really hard time of it in recent years (Seatrium or the old Sembcorp Marine as an example) but it is possible for that general marketplace to change, as it has been. One of the big problems has been countries subsidising their shipbuilders. But as demand in the market expands that becomes less of a problem, the producers operating subsidy free can pick up good business is everyone else is full. And there has been a boom in new shipbuilding.
But it’s also true that there’s an entirely new market for those who can and do offshore. Both in renewables - someone’s got to have the ships and the skills to put all those windmills out there. And also in exploring carbon capture and storage projects. Those old oil and gas fields out at sea are a logical place to do that.
Dyna-Mac share price from Google Finance
As we’ve said before about Dyna-Mac: “There is other news though. One piece is that there's been substantial insider buying over time. Management is, after all, best placed to know how the business is doing and as long as their purchases are not in a closed period we would all encourage them to put their money where their mouths are. So, they buy in, we can make certain assumptions about what they think is happening.
It's also possible to take a more whole market view. Dyna-Mac produces mechanical equipment for the oil industry. The oil price is well up - only partly to do with Russia and Ukraine - and so exploration and exploitation work is also well up. That's just what happens in a cyclical commodity business like oil and gas. So, it's possible to suggest that business is booming simply because of global economic conditions. “
Six months later that seems to be true. The market in general is booming as a result of those two global factors - the increase in oil and gas exploration and also that technological change over to offshore wind and carbon capture projects.
