Serba Di­namik main­tains rev­enue, profit fore­casts

Con­fi­dence on the back of strong locked-in or­der book

The Star Malaysia - StarBiz - - News -

PETALING JAYA: De­spite the slow­down in ten­der ac­tiv­i­ties with awards be­ing de­layed as a re­sult of Covid-19, Serba Di­namik Hold­ings Bhd main­tains its rev­enue and earn­ings growth guid­ance of 10% to 15% for fi­nan­cial year 2020 (FY20).

This is on the back of its strong locked-in or­der book, which amounts to Rm17.5bil to date.

Ac­cord­ing to Amin­vest­ment Bank Re­search, jobs awarded to the group at present are from ten­ders an­nounced from the pre­vi­ous year.

“Re­call that 44% of its or­der book stems from the mas­sive Us$1.8bil (Rm7.7bil) In­no­va­tion Hub prop­erty de­vel­op­ment project in Abu Dhabi, where the fi­nanc­ing for work­ing cap­i­tal will be fi­nalised to­wards year-end.

“Notwith­stand­ing Mid­dle-eastern losses in­curred by other Malaysian-based con­struc­tion com­pa­nies in the past, the group re­mains con­fi­dent of ex­e­cut­ing the Abu Dhabi project.

“This is given that its man­ag­ing di­rec­tor Datuk Mohd Ab­dul Karim, with his savvy busi­ness net­work, has over 10 years of com­plet­ing mul­ti­ple oil and gas jobs in the re­gion with com­mend­able profit mar­gins,” the re­search house said.

Apart from that, Serba Di­namik ex­pects the han­dover of 170 acres of in­dus­trial land with ware­houses, work­shops and fab­ri­ca­tion yard in Teluk Ra­mu­nia, Kota Tinggi, Jo­hor, this Septem­ber.

The group al­ready ex­pects to sup­port the yard with Rm100mil to Rm200mil worth of jobs from its ex­ist­ing or­der book, which is cur­rently be­ing un­der­taken in other leased fa­cil­i­ties.

The Ra­mu­nia yard, which was ac­quired for Rm320mil cash from Petronas, has an an­nual breakeven or­der book of Rm30mil to Rm40mil and is ex­pected to be prof­itable next year.

“Serba Di­namik hopes to se­cure a ma­jor fab­ri­ca­tor li­cence from Petronas by the fourth quar­ter of FY20 while po­ten­tially leas­ing parts of the yard to strate­gic part­ners.

“Serba is cur­rently eye­ing de­com­mis­sion­ing jobs, trans­porta­tion and in­stal­la­tion work which re­quire rig­ging and load­ing up points in the area to­gether with sub­con­tract­ing ac­tiv­i­ties from nearby Malaysia Marine and Heavy En­gi­neer­ing Hold­ings Bhd (MMHE),” said Amin­vest­ment Bank Re­search.

Mean­while, the group’s 30%-owned 29MW hy­dro power project in Kota Marudu, Sabah is ex­pected to be com­pleted by year-end.

Amin­vest­ment Bank said there are no ad­di­tional costs ex­pected from this Rm218mil en­gi­neer­ing, pro­cure­ment, con­struc­tion and com­mis­sion­ing (EPCC) project, de­spite the one-year delay due to Sabah Elec­tric­ity’s yetto-be-ready power grid.

Like­wise, Serba Di­namik will also not in­cur any ad­di­tional costs from its 40%-owned Kuala Tereng­ganu Utara wa­ter treat­ment plant, which will only be com­pleted by mid2021 due to the move­ment con­trol or­der (MCO).

The wa­ter treat­ment plant was orig­i­nally sched­uled for com­ple­tion in the sec­ond quar­ter of this year.

“Serba Di­namik’s good earn­ings vis­i­bil­ity, to­gether with its re­cur­ring in­come pro­file and lower bal­ance sheet risks trans­late to an un­jus­ti­fied FY21 price-earn­ings mul­ti­ple of only nine times, as com­pared to its clos­est peer Dia­log Group’s over 30 times,” said Amin­vest­ment Bank.

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