Quick take: Serba Dinamik rises 2% on earnings beat

KUALA LUMPUR: Serba Dinamik Holdings Bhd’s shares rose over 2% in early trade Tuesday after beating analyst expectations in its latest quarterly results.

The counter added 2.35%, or four sen to RM1.74 with 2.5 million shares traded. It is currently trading at a PE ratio of 10.55 times.

Serba Dinamik’s net profit rose 30% to RM148mil in the third quarter ended Sept 30, on the back of a 41.8% increase in revenue to RM1.48bil.

For the cumulative nine-month period, Serba Dinamik’s net profit improved by 20.76% year-on-year to RM429.6mil, while revenue increased by 32.49% year-on-year to RM4.2bil.

RHB Research has reiterated its buy call on Serba Dinamik with a new target price of RM2.66, offering 57% upside.

The research house said Serba Dinamik’s 9M20 results beat the house’s expectations on better operations & maintenance (O&M) contribution.

“We expect 4Q20 earnings to at least match 3Q20 and do not discount the possibility of another record earnings achievement as 4Q is typically the strongest quarter.

“We continue to like the stock for its consistent earnings growth – backed by a robust orderbook coupled with contract flow,” it said.

RHB said Serba Dinamik’s 9M20 core profit of RM441mil (+24% YoY) beat expectations, at 80% and 76% of our and street full-year projections. The positive surprise is due to better-than-expected O&M performance. A third interim dividend per share of 1.35 sen was declared, bringing year-to-date DPS to 3.85 sen,” it said.

PublicInvest Research said overall, the 9MFY20 earnings were within the house and consensus expectations, meeting 77.2% and 74.2% of full year projections.

“We keep our FY20F-22F forecasts unchanged in anticipation of the earnings remaining stable on the back of its strong outstanding orderbook of circa RM18.5bil.

“We reiterate our outperform rating on Serba with an unchanged target price of RM2.45 based on an unchanged ~13x multiple over FY21 EPS,” it said.

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