Another record breaking quarter expected for Serba Dinamik
KUALA LUMPUR: Analysts with Kenanga Investment Bank Bhd (Kenanga Research) expect another record breaking quarter ahead for Serba Dinamik Holdings Bhd (Serba Dinamik).
“Based on Serba Dinamik’s seasonally strong fourth quarter (4Q), coupled with the group’s work order flow trend, we are anticipating its upcoming 4Q to post yet another record breaking earning of more than RM150 million in core profits after tax, amortisation and minority interest (PATAMI),” it said in a company review yesterday.
This is against RM148 million in PATAMI quarter on quarter (q-o-q) in 3QFY20, and RM141 million year on year (y-o-y) in 4QFY19.
“This means that the results which are due to be released by end-Feb 2021 are highly likely to exceed our earnings expectations,” Kenanga Research added.
It went on to note that throughout last year, Serba DInamik group saw tremendous order-book growth -- from about RM10 billion in the start of the year to RM18.7 billion currently.
Naturally, working capital requirements for these new projects had resulted in mild stagnation of its cash flows in FY20.
“However, as these projects are expected to significantly start works in FY21, we highly believe cash flows should improve going forward, in-line with order-book recognition,” it opined.
“Meanwhile, the completion of the current private placement is also expected to improve its balance sheet, with net-gearing lowered to 0.6 times from its current 0.9 times.
“Overall, we see no reason for the company to not continue its consistent track record of earnings growth delivery.
“Despite the Covid-19 pandemic and low crude oil prices, Serba Dinamik rose to the occasion to meet high earnings expectations in FY20, reflecting the resiliency in its earnings growth.
“With only about 40 per cent of its current order-book derived from the oil and gas sector, we see ample opportunity of continued growth for Serba Dinamik across various engineering sectors going forward.”