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According to AmInvestment Bank Research, jobs awarded to the group at present are from tenders announced from the previous year.

PETALING JAYA: Despite the slowdown in tender activities with awards being delayed as a result of Covid-19, Serba Dinamik Holdings Bhd maintains its revenue and earnings growth guidance of 10% to 15% for financial year 2020 (FY20).

This is on the back of its strong locked-in order book, which amounts to RM17.5bil to date.

According to AmInvestment Bank Research, jobs awarded to the group at present are from tenders announced from the previous year.

“Recall that 44% of its order book stems from the massive US$1.8bil (RM7.7bil) Innovation Hub property development project in Abu Dhabi, where the financing for working capital will be finalised towards year-end.

“Notwithstanding Middle-Eastern losses incurred by other Malaysian-based construction companies in the past, the group remains confident of executing the Abu Dhabi project.

“This is given that its managing director Datuk Mohd Abdul Karim, with his savvy business network, has over 10 years of completing multiple oil and gas jobs in the region with commendable profit margins, ” the research house said.

Apart from that, Serba Dinamik expects the handover of 170 acres of industrial land with warehouses, workshops and fabrication yard in Teluk Ramunia, Kota Tinggi, Johor, this September.

The group already expects to support the yard with RM100mil to RM200mil worth of jobs from its existing order book, which is currently being undertaken in other leased facilities.

The Ramunia yard, which was acquired for RM320mil cash from Petronas, has an annual breakeven order book of RM30mil to RM40mil and is expected to be profitable next year.

“Serba Dinamik hopes to secure a major fabricator licence from Petronas by the fourth quarter of FY20 while potentially leasing parts of the yard to strategic partners.

“Serba is currently eyeing decommissioning jobs, transportation and installation work which require rigging and loading up points in the area together with subcontracting activities from nearby Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), ” said AmInvestment Bank Research.

Meanwhile, the group’s 30%-owned 29MW hydro power project in Kota Marudu, Sabah is expected to be completed by year-end.

AmInvestment Bank said there are no additional costs expected from this RM218mil engineering, procurement, construction and commissioning (EPCC) project, despite the one-year delay due to Sabah Electricity’s yet-to-be-ready power grid.

Likewise, Serba Dinamik will also not incur any additional costs from its 40%-owned Kuala Terengganu Utara water treatment plant, which will only be completed by mid-2021 due to the movement control order (MCO).

The water treatment plant was originally scheduled for completion in the second quarter of this year.

“Serba Dinamik’s good earnings visibility, together with its recurring income profile and lower balance sheet risks translate to an unjustified FY21 price-earnings multiple of only nine times, as compared to its closest peer Dialog Group’s over 30 times, ” said AmInvestment Bank.

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