KUALA LUMPUR: Kenanga Research is positive on Serba Dinamik
's 13 newly secured contracts worth RM465.1mil, which it says demonstrates its ability to continuously secure new jobs while expanding its geographical footprint.
"These contracts are from Malaysia, Bahrain, UAE, Indonesia and Kazakhstan comprising O&M and EPCC works with timeline periods mostly varying from one year to three years with an exception of one Indonesian EPCC contract lasting up to 2033," it said in its Tuesday report.
The research house said these new contracts expand Serba Dinamik's outstanding order book by 8% to RM6.6bil.
With RM3bil of new wins in FY18, this brings the company's year-to-date wins of RM1.3bil in line with Kenanga's targeted replenishment assumption.
"Margins-wise, we reckon that these jobs should be able to match its historical average GP margin (18% for O&M and 17% for EPCC)."
Kenanga noted that the acquisition of a 24.8% stake in SGX-listed CSE in April will expand the company's geographical foootprint given CSE's global presence in more than 20 countries.
"Meanwhile, it may also strengthen SERBADK’s capability in IT-related services in various IT solution platforms, which include systems automation, integration and packages. SERBADK could also tap its know-how on incinerator technology to enhance its capabilities in sewerage treatment projects."
THe research house reiterated outperform on the counter with an unchanged target price of RM2.95.
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
