"We maintain 'buy' on Serba Dinamik Holdings with unchanged forecasts and fair value of RM2.40/share, based on a 20% discount to our diluted sum-of-parts (SOP) valuation of RM2.99/share, which reflects a neutral ESG rating of 3 stars," it said in a note.
Including the contracts worth RM548mil announced on Jan 18 this year, Serba Dinamik has secured RM957mil jobs with a specific value in 1Q2021, which raises its outstanding order book slightly by 1% quarter-on-quarter to RM18.9il.
AmInvestment noted that management is aiming for FY21 order book growth of 10% to 20%.
It expects the group's revenue growth prospects to be further supported by plans to lease parts of the 170-acre Teluk Ramunia yard to third parties while angling for fresh jobs in decommissioning, petrochemicals and renewable sectors.
Meanwhile, the group's private placement of 337 million shares at RM1.51 a share in January is epected to cut net gearing to 69% from 95% as at Dec 31, 2020.
"This improved financial flexibility together with good earnings visibility from recurring O&M operations translate to an unjustified FY21F PE of only 11x vs. its closest peer Dialog Group’s 28x," said AmInvestment.