Serba Dinamik's growing order book to serve as further catalyst

  • Analyst Reports
  • Friday, 23 Aug 2019

KUALA LUMPUR: Kenanga research maintained its outperfrom call on Serba Dinamik Holdings Bhd with a target price of RM5.25 on the back of another quarter of record earnings in 2Q19.

The research house also expects contract wins for the remainder of the year to be further catalysts as the company targets an end-2019 order book of RM10bil from the current RM9bil.

Year to date wins stand at about RM2.6bil, which provides two to three years earnings visibility.

"We continue to like SERBADK for having one of the best earnings delivery track records within the oil and gas space, coupled with its outstanding management and best-in-class ROE against sector peers.

"Further contract wins and continued earnings delivery would act as catalysts moving forward," it said.

Kenanga said the company is eyeing further expansion opportunities in the central Asia region, as well as expansions in its IT-related services even as Malaysia and the Middle East still remain as the company’s stronghold markets.

In its recent earnings announcement, Serba Dinamik's quarterly PATAMI of RM10.4 brought 1H19 cumulative PATAMI to RM252.6mil, which came to 53% and 51% of Kenanga's and market's full-year expectations.

Kenanga added that the improved year-on-year performance was owing to a surge in EPCC profit, higher O&M activities in Malaysia, Indonesia and the Middle East and higher IT-related services from Qatar and India.

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