Serba Dinamik Holdings Bhd ("Serba") current orderbook of RM6.8bn is expected to remain buoyant and to see over 20% in earnings growth for FY18 and F19. YTD share price has risen over 20% but is still at an undemanding valuation of 11.8x PER FY19. BUY with target price of RM4.66 based on 14x PER FY19 as per its closest related peers.

Serba's dynamic growth since its debut on Bursa Malaysia back in Feb 2017 is nothing short of phenomenal. Domestically, Serba is a Petronas licensed company with 63 standardised work & equipment categories ("SWEC") codes which allows them to bid for projects from oil majors and oil & gas ("O&G") service providers. Serba has since grown to become a global integrated engineering service provider with revenue from overseas accounting for close to 70% and Malaysia 30%. 

Operations & Maintenance ("O&M") remains their core business with revenue of 87% while balance is from their engineering, procurement, construction and commissioning ("EPCC") works. Serba's core competence lies in their O&M business where they are reportedly a global Top 3 in maintenance repair overhaul ("MRO") of rotating equipment and Top 4 in inspection, repair maintenance ("IRM") of static equipment in the O&G.

Serba's next growth stems from its strategic plans for Pengerang Eco Industrial Park, a 62-acre site for the MRO and IRM Plant turnaround and technical vocational education and training ("NET") city to support Petronas USD62bn Pengerang Integrated complex project.

Serba's balance sheet remains healthy with net gearing at 0.06x due to recently completed private placement exercise raising RM437.2m. In line with their expansion via strategic M&A, profit has been growing at double digit with projected EPS growth > 25% for FY18 and FY19 underpin by growing orderbook estimated to hit RM7.5bn by end 2018. Serba's dividend policy of 30% is being paid out quarterly, translates to decent 2.0% dividend yield. 

Source: Rakuten Research - 30 Jul 2018