The contracts secured are expected to contribute positively to Serba Dinamik’s earnings for the financial year ending June 30, 2022.
KUCHING: Serba Dinamik Holdings Bhd’s shares were among the top most active on Bursa Malaysia today following news of new contract wins.
At closing, the counter remained as one of the most actively traded stocks, rising by two sen to 42 sen with more than 106.897 million shares changing hands.
In a statement on Wednesday, Serba Dinamik, through its Malaysian and Indonesian subsidiaries, said it has secured 15 operations and maintenance (O&M) and engineering, procurement, construction, and commissioning (EPCC) contracts.
Out of the 15 contracts, eight were valued at US$67.7 million (RM286.3 million) with the duration of works up to May 31, 2024.
Serba Dinamik said its PT SDI unit secured three O&M jobs in Indonesia, two from PT Pertamina and one from Saka Energi Muriah Ltd.
Through Serba Dinamik International Ltd, the company secured one EPCC contract for the 57.3-megawatt (MW) Myagdi Khola Hydropower project in Nepal’s Gandaki Province.
The group also bagged several contracts from Gas Malaysia Distribution Sdn Bhd.
Serba Dinamik’s chairman Datuk Ilyas Mohamed said these contracts were evidence that the company’s operational business is still in a good shape despite the challenges it is facing on the corporate front.
“Backed by our good track record, we are optimistic that Serba Dinamik has strong capability to deliver those 15 projects while ensuring that they contribute to the company’s revenue stream,” he said in the statement.
The contracts secured are expected to contribute positively to the group’s earnings for the financial year ending June 30, 2022.
Based on Public Investment Bank Bhd’s (PublicInvest Research) records, this award represents the third batch of contract wins in 2021 with four out of 15 contracts international-based projects in Indonesia and Nepal.
“Total value reported for O&M projects outside Malaysia, as well as all (including Malaysia) EPCC contracts is about RM286.3 million,” it summarised in its analysis yesterday. “There are seven local contracts in the O&M segment with no values stated as they will be based on a call-out basis.
“Nevertheless, based on the work scope, it is estimated that the value would be around RM100 million. Therefore, total value for this batch of projects is estimated at RM386.3 million The contracts’ lifespans vary, with completion up to 2025.
“The projects are estimated to yield 17 per cent profit margin at the gross level.”
With this contract, the research firm confirmed that Serba Dinamik has successfully secured a total of RM1.4 billionn worth of projects from January to date, maintaining its orderbook balance at around RM18 billion with earnings visibility up to three years based on 12-months FY20 revenue.
Serba’s EPCC segment makes up 47 per cent of its total orderbook, followed by O&M at 42 per cent and ICT at 11 per cent.
“While no specific value on orderbook target for 2021 has been given, management had, earlier this year, maintained its optimistic view to grow its orderbook or at least to maintain its balance orderbook by the end of 2021.
“Nevertheless, Covid-19 has affected the group’s bids in the tender process globally, though we think this could also have been affected by the existing statutory audit and corporate governance-related issues.
“Recall that the group has exceeded its 2020 year-end balance orderbook target of RM15 billion despite the global economic downturn due to the Covid-19 outbreak.”