RHB reiterates "Buy" on Serba Dinamik on better-than-expected results

  • Analyst Reports
  • Tuesday, 26 Nov 2019

KUALA LUMPUR: Serba Dinamik Bhd outperformed expectations in 9M19 with a core profit of RM356mil, on the back of stronger operations and maintenance margins and higher JV and associate contributions.

RHB research said the results came to 79% and 76% of its and market full-year estimates respectively.

The research house kepts it buy rating and raised its earnings forecasts on the company by 5-7% for FY19-21F and increased the target price to RM5.42.

Following the completion of a proposed share split and bonus issue next month, the target price will be adjusted to RM2.58, it said.

Moving forward, RHB said Serba Dinamik's orderbook remains solid at RM10bil, with a potential to hit RM11bil including estimated work orders from master service agreements.

It added that recent news reports suggest management is targeting a RM15bil orderbook by end-2020 from an earlier guidance of RM13-14bil.

However, management is maintaining earnings and topline guidance of 15-20%.

Meanwhile, Serba Dinamik is targeting to increase capex 20% in 2020 vs 9M19’s MYR595mil, with the potential of a smallish M&A to enhance technology infrastructure and geographical positioning.

"With all the aggressive growth plans in the pipeline, we expect further sukuk drawdowns for both working capital and capex purposes, amidst a net gearing of 0.73x as at 3Q19," said RHB

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