SCIB could leverage the connections of Datuk Karim to land contracts and establish an early track record, says Kenanga
KUALA LUMPUR: There could be "explosive growth" in store for Sarawak Consolidated Industries Bhd (SCIB) as it expands into new international markets and strengthens its position within the domestic market, says Kenanga Investment Bank Research.
The research house said SCIB could be a potential dark horse in an opportune Sarawak construction thematic play.
"With the upcoming Sarawak state elections in 2021 and a potential record state budget (refer overleaf), SCIB could be a dark horse within the state’s construction sector, competing against more established names such as CMS, Naim and HSL," it said.
SCIB, which is said to have submitted tenders for various Sarawak infrastructure projects, is the largest industrialised building system and precast concrete manufacturer in East Malaysia, which gives it an added advantage over other local players.
Kenanga has a "trading buy" recommendation on SCIB with a fair value of RM3.90.
Among notable developments, Serba Dinamik Bhd founder Datuk Mohd Abdul Karim Abdullah last year emerged as SCIB's largest shareholder with a 38.3% stake.
According to Kenanga, SCIB could leverage on the connections of Datuk Mohd Abdul Karim Abdullah Karim, who last year became the group's largest shareholder.
Karim, who is also the largest shareholder of Serba Dinamik Bhd, could aid the group in landing contracts and establishing an early track record, it added.
"Concurrent with the emergence of a new major shareholder and management, the company is now strengthening its construction business, and setting highly ambitious growth targets, aiming to hit >RM1.5b order-book by end-FY20," said Kenanga.
SCIB is aiming to penetrate new overseas markets such as the Middle East and Indonesia as well as in Malaysia, especially Sarawak.
These markets are considered Serba Dinamik's stronghold markets, especially the Middle East, which is the largest contributor to the group.
Serba Dinamik could also subcontract works to SCIB in the near future after securing mandates for related party transactions from the respective shareholders, said Kenanga.