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PublicInvest positive on Serba Dinamik Psicon acquisitions

PublicInvest Research is positive on Serba Dinamik’s two acquisitions for stakes in Psicon BV and Psicon AVV for total cash of about RM6.5mil.

“While not particularly surprising as these are in line with the Group’s strategy in strengthening on its forte, we are positive as these acquisitions further develops the Group’s capabilities in the maintenance, repair and overhaul (MRO) of rotating equipment as well as providing opportunities to access projects and markets which are complementary to the Group,” it said.

 

The acquisitions comprise 450 shares of EUR10 each in Psicon BV, representing 25% equity interest for total cash of EUR400,000 and 6,000 shares of US$1 each in Psicon AVV for 100% equity interest for total cash of US$1.1mil.

The research house noted that the acquisition will be financed entirely by cash via proceeds from the IPO of which RM95mil had already been allocated for business expansions through investments and acquisitions. 

“Given the few rounds of acquisitions this year, we expect gearing will jump significantly from 0.25x in FYE17 to about 0.5x by the end of this year though we reckon levels are still manageable.”

PublicInvest maintained its earnings forecast due to the longer-term nature of the future earnings contribution from these two developments. 

It affirmed its outperform call with a target price of RM4.69.