KUALA LUMPUR: Serba Dinamik Holdings Bhd is on a solid footing to achieve its ambitious orderbook of RM15 billion from the current RM10 billion by end-2020 driven by new contract wins.
The new orderbook target is mainly underpinned by increasing new order traction from the Middle East, Sarawak and Pengerang in Johor, and renewals and/or extensions of existing operations & maintenance (O&M) contracts, TA Securities Holdings Bhd said a recent note.
As such, the research house increased its financial year (FY) 2020/21 orderbook replenishment assumptions to RM5 billion from RM3.9 billion-RM4 billion previously.
"Correspondingly, our FY20/21 earnings forecasts are raised by 13 per cent/17 per cent and our target price is raised to RM2.70 from previous RM2.40 with a ‘buy’ call," TA Securities noted.
The firm expects order flows in Sarawak, which is estimated to be about RM1 billion, will largely emanate from new orders received by Serba Dinamik’s brand new RM259 million facility at Tanjung Kidurong, Bintulu which will be launched in the first quarter of this year.
The latter, namely Bintulu Integrated Energy Service Hub (BIEH), will cater to maintenance, repair and overhaul (MRO) works at various O&G facilities nearby.
This includes Petronas’ nine LNG trains (within 2km proximity), Petronas Chemicals’ Asean Bintulu fertilizer plants, Murphy’s Bintulu onshore receiving facility, Bintulu crude oil terminal and Sarawak Energy’s power plants.
"We understand from management that Serba Dinamik has a leading edge over its East Malaysian competitors for these MRO projects. This is given the group’s superior scale, modern integrated facilities and solid track record.
"In contrast, Serba Dinamik’s peers in Sarawak comprise mainly smallish and fragmented players," TA Securities noted.
The group announced new order wins amounted to RM3.5 billion in 2019.
This excludes the estimated RM1.5 billion-RM2 billion worth of new orders expected from Petronas’ contract for provision of mechanical rotating equipment services and parts secured last October.
There are also adhoc orders and extension orders for existing contracts with similar job scope.
"We estimate that the latter two amounted to a chunky RM574 million in 2019. As such, based on our estimates, Serba Dinamik secured circa RM5.8 billion in total new orders over 2019.
"This enabled the group to achieve its RM10 billion orderbook target by end-19 as compared to RM7.5 billion secured end-2018,” it added.