Usually, we will discuss about the target price at the end of the article. But, the target price given by the top IBs in Malaysia would definitely tell you that this stock is worth to be considered from an investment perspective.
Public Bank: Earnings Growth Intact -> Target Price: RM2.45
https://klse.i3investor.com/servlets/staticfile/408075.jsp
Malacca Securities: Growth Prospects Remain Intact -> Target Price: RM2.41
https://klse.i3investor.com/servlets/staticfile/408065.jsp
Kenanga Securities: Continues Strong Growth in 3QFY20 -> Target Price: RM2.70
https://klse.i3investor.com/servlets/staticfile/408064.jsp
Hong Leong Bank: Another Strong Quarter Despite Challenges -> Target Price: RM2.50
https://klse.i3investor.com/servlets/staticfile/408060.jsp
AmInvestment Bank: Steady earnings growth despite Covid-19 restriction -> Target Price: RM2.20
https://klse.i3investor.com/servlets/staticfile/408044.jsp
As we are discussing here today, Brent futures are climbing to a new high of $47.77 since March 2020 when the Covid-19 pandemic started. With the hope of having vaccine could be a reality by Q1’2021, many sectors are showing sign of recoveries and the players’ share price have been steadily rising. Now, it’s the turn of oil & gas sector where the share price of certain defensive players, such as Serba Dinamik, still being very much undervalued.
Despite the Covid 19 restrictions and overall negative sentiment on the oil & gas sector, Serba Dinamik has been continuing its steady growth and defensive earnings over the past three quarters. This is why Serba Dinamik looks very attractive compared to its peers.
EPS for the past three quarters has been averaging about 4.40 cents. Bear in mind that this earnings was posted despite a huge downfall in the price of oil. Now that the oil price is rising (in fact today's price is the highest since March 2020), future is looking bright for Serba Dinamik Holdings Berhad. As we look at its historic three years earnings, it is very impressive that Serba Dinamik has been maintaining its earnings despite the volatility that exist continuously in the O&G industry.
Year 2017 : Annualised EPS of 23.79 cents
Declared Annual Dividend of 6.80 cents
Year 2018: Annualised EPS of 26.62 cents
Declared Annual Dividend of 8 cents
Year 2019: Annualised EPS of 31.42 cents
Declared Annual Dividend of 7.50
And for Year 2020, the company has declared a dividend of 3.85 cents so far!
The company has also been engaged in share buy back and so far, it has bought 22M shares from the open market. The reason company usually engages in share buy back is if it feels that the current price is very much undervalued given its impressive earnings. This has been very true in the case of Serba Dinamik.
Looking at its peers valuation, it is very evident that market somehow overlooked the earning potential of Serba Dinamik. Its direct competitors whom have a similar business risk includes Dialog, Dayang, and Yinson.
Company |
Serba Dinamik |
Yinson Holdings |
Dayang |
Dialog |
EPS Q1’2020 |
4.36 cents |
5.88 cents |
0.88 cents |
2.68 cents |
EPS Q2’2020 |
4.39 cents |
4.27 cents |
-0.09 cents |
2.78 cents |
EPS Q3’2020 |
4.39 cents |
9.18 cents |
3.40 cents |
2.60 cents |
EPS Q4’2020* |
4.39 cents |
9.18 cents |
3.40 cents |
2.60 cents |
Annualised EPS |
17.53 cents |
28.51 cents |
7.59 cents |
10.66 cents |
Current Price |
RM1.70 |
RM5.16 |
RM1.02 |
RM3.70 |
Forward PE |
9.69x |
18.09x |
13.43x |
34.70x |
*Assuming Q4’2020 is similar to Q3’2020 since the oil prices are recovering.
Serba Dinamik Holdings Berhad is trading at the cheapest forward PE among its direct competitors who have a similar business risk. Even at the lowest PE of 13.43x among the other three players, Serba Dinamik Holdings should easily be valued at RM2.35.
Future prospects of Serba Dinamik as per the IBs reports.
Public Bank
Kenanga
Hong Leong Bank
Conclusion: Serba Dinamik Holdings Berhad is trading at super cheap valuation with a minimum target price of RM2.40 and this is within the target price range given out by most IBs. Even at RM2.40, it will be trading at the cheapest PE multiple amongst its peers!
Disclaimer: This is not a buy call hence you should make an investment decision either by yourself or by contacting the authorised investment advisors.
Chart | Stock Name | Last | Change | Volume |
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Created by KV | Apr 27, 2021
Created by KV | Mar 29, 2021
Created by KV | Nov 26, 2020