Highlights

Serba Dinamik Holdings Berhad - Stepping Up The ICT Space

Date: 28/09/2020

Source  :  MalaccaSecurities
Stock  :  SERBADK       Price Target  :  2.41      |      Price Call  :  BUY
        Last Price  :  1.57      |      Upside/Downside  :  +0.84 (53.50%)
 


Summary

  • Serba Dinamik Holdings Bhd (Serba Dinamik) and Huawei Technologies (M) Sdn Bhd have formed a partnership to drive digital transformation in urban and rural Malaysia. Both signed a memorandum of understanding (MOU) which marks the start of the partnership to develop digital solutions via the adoption of Huawei Cloud and Artificial Intelligence (AI) technology.
  • The MOU aims to bring about digital transformation of the oil and gas industry, innovative IT solutions on cloud and to reach the unreached by digitally enabling those in rural areas, as well as to look into setting up smart industry areas in Sarawak and Johor. The partnership aims to build smart campuses and a digital industry in Malaysia. The digital industry will include a platform for education, smart living ecosystem and automation for manufacturing, according to the companies.
  • We view the collaboration as a positive move for Serba Dinamik with the opportunity tap into Huawei Technologies technical capabilities in the technology space. In the meantime, the move is also in line with the country focus to encourage the adoption of digitalisation under the 4th Industrial Revolution (IR 4.0). The move is time as the Covid-19 pandemic has proven that digitalisation and automation is a necessity to ensure business sustainability.
  • Serba Dinamik also aims to build their ICT business as part of their business strategy to reduce the reliance on the oil & gas (O&G) business segment. With the oil & gas business currently making up to >90.0% of total revenue, Serba Dinamik aims to gradually reduce revenue contribution from the O&G segment ~50% of total revenue over the next 3 years.
  • Digital transformation will be earnings accretive for Serba Dinamik in the long run, premised to the rising demand for businesses across various sectors aiming to improve operations efficiency. Meanwhile, we expect the extended downturn in oil & gas sector to remain unsettled over a longer term period despite relevant parties’ efforts to bridge the supply-demand imbalances.

Valuation & Recommendation

  • We made no changes to our earnings forecast as we deem that the potential collaboration is still at infant stage and has yet to contribute to Serba Dinamik’s earnings. Consequently we maintain our BUY recommendation on Serba Dinamik with an unchanged target price RM2.41. Our target price is derived by ascribing an unchanged target PER of 13.0x to its revised FY21f EPS of 18.5 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 recurring income.
  • Risks to our recommendation include failure to hit the targeted outstanding orderbook of RM16.20bn by end-FY20. Meanwhile, 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 with majority of existing orderbook derived from overseas.

Source: Mplus Research - 28 Sept 2020

Share this
Labels: SERBADK

Related Stocks

Chart Stock Name Last Change Volume 
SERBADK 1.57 +0.02 (1.29%) 6,278,800 

  Be the first to like this.
 


APPS
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
 
 

418  334  641  1149 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 DNEX 0.315+0.015 
 FINTEC 0.08+0.005 
 KEYASIC 0.105+0.015 
 PBBANK 4.55+0.29 
 MLAB 0.08+0.015 
 DNEX-WD 0.065+0.005 
 PBBANK-C57 0.185+0.045 
 QES 0.39+0.025 
 KSTAR 0.18+0.005 
 BINTAI 0.63-0.015 

FEATURED POSTS

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!

TOP ARTICLES

1. HARTA RESULTS RM1 BIL - WHAT IT MEANS FOR OTHER GLOVE PLAYERS? StockAdvisor FBMKLCI
2. Tan Sri Lim: “Being sick is being abnormal.” TOPGLOV allows only 2 paid sick leave p.a. LHL please make a police report if what you says is true! gloveharicut
3. Intco, Top Glove, Supermax - A Quick Comparison Trying to Make Sense Bursa Investments
4. CIMB: FREIGHT is trading at a 60.9% & 30.8% discount to its local & regional peers gloveharicut
5. Bargain hunting lifts GLOVEs share prices, say analyst, fund manager as situation remains 'volatile' gloveharicut
6. Jaks Resources - Final Update :- Jaks Hai Duong Power Plant achieved FULL COD ! DK
7. Eurocham: No mention of lockdown after Feb 4 in meeting with Miti save malaysia!
8. Health Ministry says govt not keen to implement MCO for a long period save malaysia!
PARTNERS & BROKERS