Serba Dinamik expected to hit Rm10bil outstanding order book target
PETALING JAYA: Serba Dinamik Holdings Bhd is expected to achieve its outstanding order book target of Rm10bil by the end of fiscal 2019 (FY19) given the pace of its recent contract wins.
This implies an impressive order book growth of 33% year-on-year (YOY) and a potential FY19 forecast revenue growth of 18%–20%, which is above our conservative assumption of 16%, Aminvestment Bank research said in a report. Serba Dinamik’s Rm2.4bil in contracts announced year to date accounts for 60% of the group’s FY19 forecast revenue, which Aminvestment estimates will raise its outstanding order book by 8% from 2QFY19 to Rm9.7bil currently.
Serba Dinamik expects the continuation of strong revenue growth this year driven by growing demand in the Middle East and Southeast Asia, spearheaded by the UAE and Qatar. “We maintain our buy call on Serba Dinamik with unchanged forecasts and sumof-parts-based (SOP) fair value of RM6.50/ share, which implies an FY19F PE of 20x - 44% below Dialog’s 36x, the company’s closest peer in Malaysia,” the research house said.
This valuation is before the group’s proposed 1-for-2 share split, 2-for-5 bonus issue and 2 warrants for 5 shares which could expand its share base by 2.7x to 4bil, it added.
Serba Dinamik recently announced two contracts worth a total of Us$163mil (Rm683mil) comprising a delivery of equipment to a 214km gas pipeline in Turkmenistan and a three-year operation and maintenance job to repaid and maintain equipments from Revenue International LLC in Oman.
The group also secured an engineering, procurement, construction and commissioning or EPCC job for a boiler project at Asean Bintulu Ferilizer in Bintulu, Sarawak and two additional O&M contracts: the provision of mechanical rotating maintenance services to SEA Hibiscus Sdn Bhd and Petronas on a firm three-year period and a one-year extension option.
Meanwhile, Alliance DBS said that the master service agreement contract from Petronas could boost its revenue by more than Rm1bil.
However, it said that this would depend on when Petronas decides to commence the maintenance, repair and overhaul works and how many players it intends to award contracts to.
Going forward, Serba Dinamik is expected to remain aggressive in pursuing new contracts to build its order book, said Alliance DBS.