KUALA LUMPUR: AmInvestment Bank Research reiterated its "buy" recommendation on Serba Dinamik Holdings Bhd
and fair value of RM2.20 a share following the announcement of a series of new contracts.
The group said yesterday it had secured 11 new contracts with a firm value of US$136mil (RM548mil) to provide equipment and services to multiple clients over periods ranging from three months to 15 years.
According to AmInvestment, it believes Serba Dinamik's outstanding order book has increased 1% quarter-on-quarter to RM18.7bil.
"As previously highlighted, this locked-in future revenue has already exceeded the group’s earlier FY20F target of RM15bil (+50% YoY) which was set in the beginning of 2020," said the research house.
It added that it expects additional contracts this year as Serba Dinamik aims to lease parts of the 170-acre Teluk Romania yeard, which costs RM430mil, to third parties while angling for fresh jobs in decommissioning, petrochemicals and renewable sectors.
Meanwhile, the group's 10% proposed private placement is expected to reduce its 3QFY20 net gearing of 0.9x to a more confortable 0.6x while diluting its FY21 forecast earnings per share by 7% to 18 sen, assuming interest savings at 3%, it said.
"Upon completion of the placement by 1QFY21, this still translates to an attractive pro forma PE of 11x, far below
Dialog’s over 30x.
"Pending completion of the exercise, we maintain our FY21F–FY22F EPS for now.
"Hence, the group’s good earnings growth trajectory together with its recurring income profile translate to a compelling FY21F PE of only 8x vs. its closest peer Dialog Group’s over 30x," said AmInvestment.
and fair value of RM2.20 a share following the announcement of a series of new contracts.The group said yesterday it had secured 11 new contracts with a firm value of US$136mil (RM548mil) to provide equipment and services to multiple clients over periods ranging from three months to 15 years.
According to AmInvestment, it believes Serba Dinamik's outstanding order book has increased 1% quarter-on-quarter to RM18.7bil.
"As previously highlighted, this locked-in future revenue has already exceeded the group’s earlier FY20F target of RM15bil (+50% YoY) which was set in the beginning of 2020," said the research house.
It added that it expects additional contracts this year as Serba Dinamik aims to lease parts of the 170-acre Teluk Romania yeard, which costs RM430mil, to third parties while angling for fresh jobs in decommissioning, petrochemicals and renewable sectors.
Meanwhile, the group's 10% proposed private placement is expected to reduce its 3QFY20 net gearing of 0.9x to a more confortable 0.6x while diluting its FY21 forecast earnings per share by 7% to 18 sen, assuming interest savings at 3%, it said.
"Upon completion of the placement by 1QFY21, this still translates to an attractive pro forma PE of 11x, far below
Dialog’s over 30x.
"Pending completion of the exercise, we maintain our FY21F–FY22F EPS for now.
"Hence, the group’s good earnings growth trajectory together with its recurring income profile translate to a compelling FY21F PE of only 8x vs. its closest peer Dialog Group
’s over 30x," said AmInvestment.
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