Serba Dinamik Holdings Berhad - Secured another batch of contracts

Date: 01/07/2020

Source  :  MalaccaSecurities
Stock  :  SERBADK       Price Target  :  2.09      |      Price Call  :  BUY
        Last Price  :  1.65      |      Upside/Downside  :  +0.44 (26.67%)


  • Serba Dinamik Holdings Bhd has secured a total of ten contracts, comprising of (i) one engineering, procurement, construction and commissioning (EPCC) contract in Indonesia, (ii) two information, communication & technology (ICT) contracts in Zambia and (iii) seven operations & maintenance (O&M) contracts in Malaysia. The recent batch of contracts will provide sustainable income till July 2027.
  • With the exclusion of O&M contracts due to their nature of work scopes being call out basis, the EPCC and ICT contracts secured has a combined value of approximately US$126.8m (c.RM543.5m), adding the group’s outstanding orderbook to approximately RM17.5bn, representing 3.8x orderbook-to-revenue cover ratio against FY19 revenue of RM4.5bn.
  • The latest win is a testament of Serba Dinamik’s position as one of the major players in the oil & gas industry as the group makes a step closer towards achieving an internal targeted outstanding orderbook of RM15.0bn by end-FY20. Assuming a burn rate of approximately RM2.8bn in 2HFY20, the group only needs to secure approximately RM500.0m to the hit the internal target.
  • Additionally the new wins for the ICT segment is also in line with the group’s effort to diversify their reliance on the oil & gas business segment. All in all, we are positive on the contract wins, with long term growth rate remains on the table. Moving forward, we also see Serba Dinamik’s bread and butter business (oil & gas) will continue to be the main driver of the group’s growth over the foreseeable future with the oil & gas business segment contributing >80% of total revenue in both FY20 and FY21 respectively.

Valuation & Recommendation

  • With the orderbook replenishment coming within our expectations, we made no changes to our earnings forecast and we maintain our BUY recommendation on Serba Dinamik with an unchanged target price RM2.09. Our target price is derived by ascribing an unchanged target PER of 13.0x to its FY21 EPS of 16.1 sen.
  • We continue to like Serba Dinamik as one of the key players in the oil & gas industry, backed by its sturdy orderbook comprising of dozens of jobs from local and overseas that will provide long-term earnings visibility, coupled with the group’s on going effort diversification into businesses that generates long-term recurring income.
  • Risks to our recommendation include failure to hit the targeted outstanding orderbook of RM15.0bn by end-FY20. A firmer ringgit against the USD could affect the group’s bottom line as it will have a negative impact on the group’s earnings and vice versa.

Source: Mplus Research - 1 Jul 2020

Share this

Related Stocks

Chart Stock Name Last Change Volume 
SERBADK 1.65 -0.03 (1.79%) 12,356,000 

  Be the first to like this.

I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View Trading Signals and run Live Backtest
MQ Affiliate
Earn rewards with MQ Affiliate Program

457  490  616  543 

Top 10 Active Counters
 PRG 0.285+0.055 
 PNEPCB 0.42-0.08 
 XOX 0.105-0.005 
 AT 0.185+0.01 
 SEALINK 0.18+0.015 
 GPA 0.125+0.015 
 IRIS 0.405-0.01 
 JCY 0.515-0.07 
 MTRONIC 0.105+0.005 
 ASIAPLY 0.30+0.03 


1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!


1. Evidence that prove JP Morgan's Jeffrey Ng analyst report on Glove is irresponsible and materially full with unreliable data GillianTan Reviews
2. UNISEM (5005) - Super Powerful Technology Counter Bursa Malaysia Free Trading Education
3. 1% left of Topglove shares to be shorted by JP Morgan and their foreign associates. Don't let foreign investors fool you to sell GillianTan Reviews
4. Gloves - Some Significant Problems with JP Morgan's Report Trying to Make Sense Bursa Investments
5. AT Glove (0072) - Second glove factory (Step 5) Rubber Glove companies till year 2023
6. Daily technical highlights – (OCK, TGUAN) Kenanga Research & Investment
7. Gloves Market Revenue - CAGR 13% during period 2021-2026 Rubber Glove companies till year 2023
8. Thong Guan Industries Bhd - Beaten Down Too Much Kenanga Research & Investment