SPAC sponsorship to bolster Serba Dinamik’s ICT segment


AmInvestment maintained its “buy” call on Serba Dinamik with unchanged forecasts and fair value of RM2.40 per share, given its improved net gearing and good earnings visibility from recurring operations and maintenance operations.

KUALA LUMPUR: Serba Dinamik Holdings Bhd’s sponsorship of a Nasdaq-listed special-purpose acquisition company (SPAC) to the tune of US$5.85mil (RM24.03mil) will help enhance value for the group’s ICT segment.

Last week, Serba Dinamik announced its sponsorship of Data Knights Acquisition Corp – a SPAC looking to identify and acquire a business focusing on data centres and Internet technology sectors.

Via its initial public offering (IPO), Data Knights, which commenced trading of its shares on Nasdaq on May 7, has managed to raise US$100mil (RM410.8mil) of public equity via the offering of 10 million shares priced at US$10 per unit.

Although the immediate-term impact of this investment for Serba Dinamik is rather small, Kenanga Research noted that this deal bodes well for the company in the long term.

“While the investment outlay of US$5.85mil is rather small for a company of Serba Dinamik’s size, with its net-gearing staying relatively steady at about 1.0 time, we believe Serba Dinamik is seeking to use this opportunity to enhance value for the group’s ICT segment as well as fuelling its ambitions to continue growing the segment, ” the brokerage said in report.

As at the last closing market cap of US$106mil (with last price of US$10.07 per share), Kenanga noted that Serba Dinamik’s 22.9% stake in the SPAC is now worth about US$24mil (RM98.60mil).

AmInvestment Bank is similarly positive on the deal, noting the immediate fair value gains for the company.

The research house pointed out that at US$10 per share and market capitalisation of US$100mil, it translates to a potential fair value gain of US$14mil (RM57.51mil) or 8% of Serba Dinamik’s FY21 forecast earnings.

“The group could leverage the SPAC under its management to secure fresh technology-related contracts globally and secure external equity funds from US investors.

“It could also have other projects in the pipeline, including its space division involving a satellite to provide communications connectivity to unreached areas in the country, ” AmInvestment said.

Data Knights plans to leverage its management team’s experience, targeting data centres and Internet technology sectors globally and focusing on disruptive technologies and business platforms.

Recall that Serba Dinamik is building a US$350mil (RM1.4bil) data centre in Mussaffah, Abu Dhabi, for Future Digital Data Systems LLC. This project, secured in August last year, is expected to be completed by September 2024.

AmInvestment maintained its “buy” call on Serba Dinamik with unchanged forecasts and fair value of RM2.40 per share, given its improved net gearing and good earnings visibility from recurring operations and maintenance operations.

Kenanga has, likewise, kept its “outperform” rating on the stock, premised on the group’s resilient earnings growth potential and attractive valuation of 10 time price-earnings ratio.

It has an unchanged target price of RM2.80 on the stock.

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