KUALA LUMPUR: PublicInvest Research has affirmed its outperform rating for Serba Dinamik Holdings Bhd
with a target price of RM4.69 following the announcement that it is acquiring a 49% stake in OHP Venture Incorporated for US$800,000.
The acquisition is expected to allow Serba to undertake more EPCC, operation and maintenance contracts.
These will include two mini hydro proects in Houaphan distrcit via OHP Ventures' 70% share in Nam Taep 1.2.3 Hydropwer Co Ltd, which holds two concessions for the project, said the research house.
PublicInvest noted that the purchase consideration of US$800,000 takes into account the future earnings potential and will be funded entirely by cash via IPO proceeds of RM95mil earmarked for acquisitions.
"Given the few rounds already done this year, we expect gearing will jump significantly from 0.25x in FYE17 to about 0.5x by the end of this year," it said.
The acquisition will solidify Serba's presence in Laos, allowing it to participate in more projects in the future.
"We believe the Group will secure more hydro-based projects and is on track to achieving its 200MW target by year end. This also would help the Group to hit a targeted RM7.5bn outstanding
orderbook by end of 2018," said PublicInvest.
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