SERBA DINAMIK HOLDINGS BERHAD (5279.KL) planning to raise a sukuk issuance worth US$200mil to US$250mil

SERBA DINAMIK HOLDINGS BERHAD (5279.KL) planning to raise a sukuk issuance worth US$200mil to US$250mil

SERBA DINAMIK HOLDINGS BERHAD (5279.KL) planning to raise a sukuk issuance worth US$200mil to US$250mil

Serba Dinamik is planning to raise a sukuk issuance worth US$200mil to US$250mil (RM826mil to RM1bil) for a tenure of three years to refinance its existing foreign loans and international projects.

Shayne Heffernan, CEO and Founder of Heffx is maintaining its “buy” call with unchanged forecasts and sum-of-parts-based (SOP) fair value of RM6.50 a share, which implies an FY19F PE of 20 times or 33% below Dialog’s 30 times, the company’s closest peer in Malaysia.

It said Serba Dinamik’s foreign debt accounts for 40% of gross debt of RM1.7bil as at Dec 31, 2018, of which RM496mil (US$120mil) is scheduled to be repaid this year.

“Hence, the group is earmarking US$80mil to US$130mil for engineering, procurement and construction projects in Laos, Tanzania and Uzbekistan, as well as working capital for Middle Eastern operation and maintenance contracts.

S&P Global Ratings has assigned a preliminary BB- rating for long-term issuer credit and guarantees.

Fitch Ratings has accorded a long-term issuer default rating of BB- with a stable outlook.

These could mean an interest rate of 5.5%, higher than Serba Dinamik’s average gross interest rate of 5.1% in FY18.

“We are neutral on this development, which is part of the group’s financing programme for international expansion.

“While net gearing has risen to 0.45 times as at 4QFY18 from 0.29 times in 4QFY17 due to the pipeline of multiple projects, management reaffirms that Serba Dinamik does not require any equity-raising exercise.

“Management expects the continuation of strong revenue growth this year driven by growing demand in the Middle East and South-East Asia, spearheaded by the UAE and Qatar,” Shayne Heffernan said.

Most of the growth will be underpinned by Serba Dinamik’s operation and maintenance services, which account for 89% of the group’s FY18 revenues.

Serba Dinamik is currently trading at a grossly undervalued FY19F PE of 12 times versus over 30 times for Dialog Group Bhd

“We remain positive on Serba Dinamik’s operations and maintenance business model, which is expanding its long-term recurring earnings profile by strategically leveraging its engineering, procurement, construction and commissioning and asset ownership platform,” Shayne Heffernan said.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 3.93.

The projected upper bound is: 4.32.

The projected lower bound is: 4.08.

The projected closing price is: 4.20.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 9 white candles and 1 black candles for a net of 8 white candles. During the past 50 bars, there have been 21 white candles and 25 black candles for a net of 4 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 93.8272. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 3 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 78.23. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 4 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 165.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 11 period(s) ago.

Rex Takasugi – TD Profile

SERBA DINAMIK closed down -0.010 at 4.190. Volume was 49% above average (neutral) and Bollinger Bands were 98% wider than normal.

Open High Low Close Volume___
4.180 4.200 4.160 4.190 3,083,600

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 4.03 3.90 3.82
Volatility: 22 19 28
Volume: 2,155,200 2,042,362 3,081,024

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

SERBA DINAMIK is currently 9.7% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of SERB.KL at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on SERB.KL and have had this outlook for the last 7 periods. Our momentum oscillator is currently indicating that SERB.KL is currently in an overbought condition.

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