Today, we are seeing trading interest shift to Dyna-Mac Holdings (DHML SP). It is still cheap, trading at -1SD below its 7-year P/B average. It also announced a new director two days ago from Keppel Corp, which we think may signal more collaboration between the two companies.
There could be several drivers for interest in the small-mid cap oil & gas stocks. Funds are scooping up bargains, buying up assets for 10% of their pre-crisis prices. Business Times also reported this morning that one of Temasek's units may be taking a stake in Marco Polo, a distressed oil & gas firm, as well as a potential capital injection into Ezion. We continue to reiterate our bullish view on the Oil & Gas sector and believe we are just at the start of a multi-year bull run in the sector.
Figure 1: Dyna-Mac’s current P/B still near -1SD below its 7-year average.
|Source : Bloomberg|
Figure 2: Dyna-Mac's share price has broken its 6-months resistance level. We continue to expect rotational interest among local small-mid cap oil & gas names.
|(Source: KGI CONNEX)|