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KUALA LUMPUR (Dec 4): Kenanga Research has maintained its “superior performance” call for Serba Dinamik Holdings Bhd, with a higher price target (TP) of RM2.75 from RM2.70, set at 15 times the price ratio. – Earnings (PER) projected for the financial year ending December 31, 2021 (FY21).
The research house said it continues to like the group given its excellent record earnings delivery, and having one of the best returns on equity (ROE) in the industry.
In summary, Serba Dinamik announced yesterday that it had secured a total of nine new contracts, consisting of five jobs from abroad and another four local, with a combined estimated contract value of RM465.9 million.
“Following the announcement, we increased our fiscal year 21E profit (estimate) by 1% as we slightly increased our backlog replenishment assumption to RM11 billion (from RM10 billion),” said Kenanga analyst Research Steven Chan.
Chan said the research house is positive in terms of contracts won, showing the group’s excellent job delivery and contract award capabilities, especially in today’s challenging environment.
“We expect these contracts to reach gross margins of around 15%, in line with the group’s historical average,” Chan said in a note.
More particularly, Chan said that Kenanga is also positive on the two information and communication technology (ICT) contracts won in Indonesia and Guinea as he sees this as the continued result of Serba Dinamik’s efforts to expand in the sector. .
“We estimate that these two contracts won will be worth approximately US $ 45 million (approximately RM182.83 million). The segment is beginning to see significant contributions towards its bottom line over the past one or two quarters, and with continued expansion initiatives in the sector, it is likely that we will see this trend continue and improve further, ”Chan added.
According to him, the group is expected to gradually reduce its dependence on oil and gas (O&G), improving its ability to recover earnings.
At the time of writing, Serba Dinamik shares were up eight sen or 4.82% at RM 1.74, giving the shares a market value of RM 5.9 billion.
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