Tuesday, January 21

Serba Dinamik’s latest wins garner positive reactions

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The new contracts bring Serba Dinamik’s year to date wins to approximately RM2.5 billion and orderbook to approximately RM9 billion.

KUCHING: Serba Dinamik Holdings Bhd’s (Serba Dinamik) latest contract wins has garnered positive reactions, with analysts believing that the group remains on track to reach management’s outstanding order book target of RM10 billion by end-financial year 2019 forecast (FY19F).

In a filing on Bursa Malaysia, Serba Dinamik’s board of directors announced that wholly-owned subsidiaries Serba Dinamik International Ltd secured one engineering, procurement, construction and commissioning (EPCC) contract while Serba Dinamik Sdn Bhd secured two operations and maintenance (O&M) contracts.

“We are positive on the contract wins, highlighting the company’s continued capabilities in securing new jobs,” the research arm of Kenanga Investment Bank Bhd (Kenanga Research) said.

“In fact, the company had previously highlighted Central Asia as a key growth market, and hence, the massive EPCC contract win in Uzbekistan represents a fruition of this growth strategy.

“The new contracts bring year to date (YTD) wins to approximately RM2.5 billion, and order book to approximately RM9 billion. We expect these contracts to fetch roughly 17 per cent gross margins.”

Moving forward, Kenanga Research expected more contract wins as management targets order-book to reach RM10 billion by end of the year, providing earnings visibility for at least the next two to three years.

“We expect more jobs flow to come from Central Asia as the company aims to expand further into the region, while also relying on its stronghold markets in the Middle-east and Malaysia.”

Given the pace of new contract wins, AmInvestment Bank Bhd (AmInvestment Bank) also believed that Serba Dinamik remains on track to reach management’s outstanding order book target of RM10 billion by end-FY19F.

“This implies an impressive order book growth of 33 per cent year on year (y-o-y) and a potential FY19F revenue growth of 18 per cent to 20 per cent, which is above our conservative assumption of 16 per cent.

“Management expects the continuation of strong revenue growth this year driven by growing demand in the Middle East and Southeast Asia, spearheaded by the UAE and Qatar.”

“We remain positive on Serba Dinamik’s O&M business model, which is still actively expanding its long-term recurring earnings profile by strategically leveraging its EPCC and ownership platform, similar to Dialog Group Bhd.”