PETALING JAYA: Dancomech Holdings Bhd
’s earnings is expected to register an annual growth rate of 14% for the next three years driven by demand recovery in the oil and gas (O&G) sector as well as from its recent acquisitions, according to UOB Kay Hian Research.
The research house initiated coverage on Dancomech with the expectation that the company would experience “significant growth” starting from the first half of this year.
“With the anticipated reopening of the global economy that accompanies the dispensation of Covid-19 vaccines, Dancomech is looking forward to enjoying brisk demand growth over the next couple of years arising from numerous factors such as demand recoveries from its key customers from the O&G sectors which have earlier been badly impacted by the Covid-19 pandemic and contributions from the newly-bagged subcontract at Jurong Port,” it said in a report.
In addition, UOB Kay Hian said Dancomech’s earnings would be driven from its newly-acquired 70%-owned subsidiary MTL Engineering and potential growth in orderbook from the upcoming water treatment and sewerage plants’ capacity expansion.
We estimate Dancomech to register core net profit of RM23mil and RM24mil in 2021 and 2022, respectively, which implies a three-year compounded annual growth rate (CAGR) of 14% in 2020 to 2022. This is on the back of a three-year revenue CAGR of 15%," it said.
Dancomech trades and supplies equipment to varied segments including those involved in oleochemicals, palm oil refineries as well as engineering, procurement, construction and commissioning (EPCC) works.
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